Finance Act 1996

Chapter VIU.K. Miscellaneous provisions

ReliefsU.K.

F1143 Annual payments under certain insurance policies.U.K.

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

[F2144 Vocational training.U.K.

(1)Section 32 of the M1Finance Act 1991 (vocational training relief) shall be amended in accordance with the following provisions of this section.

(2)In subsection (1) (application of section) for paragraph (ca) (individual has attained school leaving age etc at time of paying for the course) there shall be substituted—

“(ca)at the time the payment is made, the individual—

(i)in a case where the qualifying course of vocational training is such a course by virtue only of paragraph (b) of subsection (10) below, has attained the age of thirty, or

(ii)in any other case, has attained school-leaving age and, if under the age of nineteen, is not a person who is being provided with full-time education at a school,”.

(3)For subsection (10) (meaning of “qualifying course of vocational training”) there shall be substituted—

“(10)In this section “qualifying course of vocational training” means—

(a)any programme of activity capable of counting towards a qualification—

(i)accredited as a National Vocational Qualification by the National Council for Vocational Qualifications; or

(ii)accredited as a Scottish Vocational Qualification by the Scottish Vocational Education Council; or

(b)any course of training which—

(i)satisfies the conditions set out in the paragraphs of section 589(1) of the Taxes Act 1988 (qualifying courses of training etc),

(ii)requires participation on a full-time or substantially full-time basis, and

(iii)extends for a period which consists of or includes four consecutive weeks,

but treating any time devoted to study in connection with the course as time devoted to the practical application of skills or knowledge.”

(4)This section applies to payments made on or after 6th May 1996.]

F3145 Personal reliefs for non-resident EEA nationals.U.K.

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

F4146 Exemptions for charities.U.K.

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

147 Withdrawal of relief for Class 4 contributions.U.K.

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

(2)In consequence of the provision made by subsection (1) above, in paragraph 3(2) of Schedule 2 to—

(a)the M2Social Security Contributions and Benefits Act 1992, and

(b)the M3Social Security Contributions and Benefits (Northern Ireland) Act 1992,

the words “ (e) section 617(5) (relief for Class 4 contributions); ” shall be omitted.

(3)This section shall have effect in relation to the year 1996-97 and subsequent years of assessment.

148 Mis-sold personal pensions etc.U.K.

(1)Income tax shall not be chargeable on any payment falling within subsection (3) or (5) below.

(2)Receipt of a payment falling within subsection (3) below shall not be regarded for the purposes of capital gains tax as the disposal of an asset.

(3)A payment falls within this subsection if it is a capital sum by way of compensation for loss suffered, or reasonably likely to be suffered, by a person in a case where that person, or some other person, acting in reliance on bad investment advice at least some of which was given during the period beginning with 29th April 1988 and ending with 30th June 1994,—

(a)has, while eligible, or reasonably likely to become eligible, to be a member of an occupational pension scheme, instead become a member of a personal pension scheme or entered into a retirement annuity contract;

(b)has ceased to be a member of, or to pay contributions to, an occupational pension scheme and has instead become a member of a personal pension scheme or entered into a retirement annuity contract;

(c)has transferred to a personal pension scheme accrued rights of his under an occupational pension scheme; or

(d)has ceased to be a member of an occupational pension scheme and has instead (by virtue of such a provision as is mentioned in section 591(2)(g) of the Taxes Act 1988) entered into arrangements for securing relevant benefits by means of an annuity contract.

(4)A payment chargeable to income tax apart from subsection (1) above may nevertheless be regarded as a capital sum for the purpose of determining whether it falls within subsection (3) above.

(5)A payment falls within this subsection if and to the extent that it is a payment of interest, on the whole or any part of a capital sum such as is mentioned in subsection (3) above, for a period ending on or before the earliest date on which a determination (whether or not subsequently varied on an appeal or in any other proceedings) of the amount of the particular capital sum in question is made, whether by agreement or by a decision of—

(a)a court, tribunal or commissioner,

(b)an arbitrator or (in Scotland) arbiter, or

(c)any other person appointed for the purpose.

(6)In this section—

• “bad investment advice” means investment advice in respect of which an action against the person who gave it has been, or may be, brought—

  (a)

  in or for negligence;

  (b)

  for breach of contract;

  (c)

  by reason of a breach of a fiduciary obligation; or

  (d)

  [F6by reason of a contravention which is actionable—

  (i)

  under section 62 of the Financial Services Act 1986; or

  (ii)

  under section 150 of the Financial Services and Markets Act 2000;]

• [F7“investment advice”—

  (a)

  in relation to a time before 1st December 2001, means advice such as is mentioned in paragraph 15 of Schedule 1 to the Financial Services Act 1986; and

  (b)

  in relation to a time on or after that date, means advice such as is mentioned in Article 53 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001;]

• “occupational pension scheme” means—

  (a)

  a scheme approved, or being considered for approval, under Chapter I of Part XIV of the Taxes Act 1988 (retirement benefit schemes);

  (b)

  a relevant statutory scheme, as defined in section 611A(1) of that Act; or

  (c)

  a fund to which section 608 of that Act applies (superannuation funds approved before 6th April 1980 etc);

• “personal pension scheme” has the meaning given by section 630(1) of the Taxes Act 1988;

• “relevant benefits” has the meaning given by section 612(1) of the Taxes Act 1988;

• “retirement annuity contract” means a contract made before 1st July 1988 and approved by the Board under or by virtue of any provision of Chapter III of Part XIV of the Taxes Act 1988.

[F8(6A)References in subsections (3)(d) and (6) to provisions of Part 14 of the Taxes Act 1988 are to those provisions as they had effect at the time in question.]

(7)This section shall have effect, and be taken always to have had effect, in relation to any payment falling within subsection (3) or (5) above, whether made before or after the passing of this Act.

[F9149 Annual payments in residuary cases.U.K.

(1)Section 347A of the Taxes Act 1988 (annual payments not a charge on the income of a payer) shall apply to any payment made on or after 6th April 1996—

(a)in pursuance of any obligation which falls within section 36(4)(a) of the M4Finance Act 1988 (existing obligations under certain court orders), and

(b)for the benefit, maintenance or education of a person (whether or not the person to whom the payment is made) who attained the age of 21 before 6th April 1994,

as if that obligation were not an existing obligation within the definition contained in section 36(4) of the Finance Act 1988.

(2)Subsection (1) above does not apply to any payment to which section 38 of the Finance Act 1988 (treatment of certain maintenance payments under existing obligations) applies.]

F10150 Income tax exemption for periodical payments of damages and compensation for personal injury.U.K.

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

Taxation of benefitsU.K.

151 Benefits under pilot schemes.U.K.

(1)The Treasury may by order make provision for the Income Tax Acts to have effect in relation to any amount of benefit payable by virtue of a Government pilot scheme as if it was, as they think fit, either—

(a)wholly or partly exempt from income tax and, accordingly, to be disregarded in computing the amount of any receipts brought into account for income tax purposes; or

(b)to the extent specified in the order, to be brought into account for the purposes of income tax as income of a description so specified or as a receipt of a description so specified.

(2)The Treasury may by order provide for any amount of benefit payable by virtue of a Government pilot scheme to be left out of account, to the extent specified in the order, in the determination for the purposes of [F11section 532 of the Capital Allowances Act (exclusion of expenditure met by contributions)] of how far any expenditure has been or is to be met directly or indirectly by the Crown or by an authority or person other than the person actually incurring it.

(3)In this section “Government pilot scheme” means any arrangements (whether or not contained in a scheme) which—

(a)are made, under any enactment or otherwise, by the Secretary of State or any Northern Ireland department;

(b)make provision for or about the payment of amounts of benefit either—

(i)for purposes that are similar to those for which any social security or comparable benefit is payable; or

(ii)for purposes connected with the carrying out of any functions of the Secretary of State or any such department in relation to employment or training for employment;

(c)are arrangements relating to a temporary experimental period; and

(d)are made wholly or partly for the purpose of facilitating a decision as to whether, or to what extent, it is desirable for provision to be made on a permanent basis for or in relation to any benefit.

(4)In subsection (3)(b) above the reference to making provision for or about the payment of amounts of benefit for purposes that are similar to those for which any social security or comparable benefit is payable shall include a reference to making provision by virtue of which there is a modification of the conditions of entitlement to, or the conditions for the payment of, an existing social security or comparable benefit.

(5)An order under this section may—

(a)make different provision for different cases, and

(b)contain such incidental, supplemental, consequential and transitional provision (including provision modifying provision made by or under the Income Tax Acts) as the Treasury may think fit.

(6)In this section “benefit” includes any allowance, grant or other amount the whole or any part of which is payable directly or indirectly out of public funds.

(7)The power to make an order under this section—

(a)shall be exercisable for the year 1996-97 and subsequent years of assessment; and

(b)so far as exercisable for the year 1996-97, shall be exercisable in relation to benefits, allowances and other amounts paid at times on or after 6th April 1996 but before the making of the order.

(8)The Treasury shall not make an order under this section containing any such provision as is mentioned in subsection (1)(b) above unless a draft of the order has been laid before, and approved by a resolution of, the House of Commons.

F12152 Jobfinder’s grant.U.K.

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

InvestmentsU.K.

F13153 Foreign income dividends.U.K.

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

154 FOTRA securities.U.K.

(1)The modifications which, under section 60 of the M5Finance Act 1940, may be made for the purposes of any issue of securities to the conditions about tax exemption specified in section 22 of the M6Finance (No. 2) Act 1931 shall include a modification by virtue of which the tax exemption contained in any condition of the issue applies, as respects capital, irrespective of where the person with the beneficial ownership of the securities is domiciled.

F14(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F15(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F16(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F17(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F18(6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7)Schedule 28 to this Act (which contains amendments consequential on the provisions of this section) shall have effect.

F19(8). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(9)This section and Schedule 28 to this Act shall have effect—

(a)for the purposes of income tax, for the year 1996-97 and subsequent years of assessment; and

(b)for the purposes of corporation tax, for accounting periods ending after 31st March 1996.

F20155 Directions for payment without deduction of tax.U.K.

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

F21156 Paying and collecting agents etc.U.K.

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

157 Stock lending fees.U.K.

(1)After section 129A of the Taxes Act 1988 (interest on cash collateral paid in connection with stock lending arrangements) there shall be inserted the following section—

“129B Stock lending fees.

(1)The income which, as income deriving from investments of a description specified in any of the relevant provisions, is eligible for relief from tax by virtue of that provision shall be taken to include any relevant stock lending fee.

(2)For the purposes of this section the relevant provisions are sections 592(2), 608(2)(a), 613(4), 614(3), 620(6) and 643(2).

(3)In this section “relevant stock lending fee”, in relation to investments of any description, means any amount, in the nature of a fee, which is payable in connection with an approved stock lending arrangement relating to investments which, but for any transfer under the arrangement, would be investments of that description.

(4)In this section “approved stock lending arrangement” has the same meaning as in Schedule 5A.”

(2)This section has effect in relation to any arrangements entered into on or after 2nd January 1996.

F22158 Transfers on death under the accrued income scheme.U.K.

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

159 Manufactured payments, repos, etc.U.K.

(1)Sections 729, 737A(2)(b) and 786(4) of the Taxes Act 1988 (provisions applying to sale and repurchase agreements) shall cease to have effect except in relation to cases where the initial agreement to sell or transfer the securities or other property was made before the appointed day.

[F23(2)In section 737 of that Act—

(a)in subsection (5) (manufactured dividends paid to UK residents by non-residents), for the words from “a person resident in the United Kingdom” to “the United Kingdom recipient shall” there shall be substituted “ a United Kingdom recipient, that recipient shall ”; and

(b)after that subsection there shall be inserted the following subsection—

“(5AAA)For the purposes of subsection (5) above a person who receives a manufactured dividend is a United Kingdom recipient if—

(a)he is resident in the United Kingdom; or

(b)he is not so resident but receives that dividend for the purposes of a trade carried on through a branch or agency in the United Kingdom.”

F23(3)In section 737C of that Act (deemed manufactured payments), the following subsection shall be inserted after subsection (11A) in relation to cases where the initial agreement to sell the securities is made on or after the appointed day, that is to say—

“(11B)The preceding provisions of this section shall have effect in cases where paragraph 2, 3 or 4 of Schedule 23A would apply by virtue of section 737A(5) but for paragraph 5 of that Schedule as they have effect in a case where the paragraph in question is not disapplied by paragraph 5; and where—

(a)the gross amount of the deemed manufactured interest, or

(b)the gross amount of the deemed manufactured overseas dividend,

falls to be calculated in such a case under subsection (8) or (11) above, it shall be so calculated by reference to the provisions of paragraph 3 or 4 of Schedule 23A that would have applied but for paragraph 5 of that Schedule.”]

F24(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F24(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F24(6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7)In sub-paragraph (1) of paragraph 8 of that Schedule (power to modify provisions of Schedule)—

F25(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F26(b)in the words after paragraph (b), for “paragraph 2, 3 or 4 above” there shall be substituted “ paragraphs 2 to 5 above ”.]

F27(8). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(9)Subsections (2), (4) and (5) above have effect—

(a)for the purposes of corporation tax, in relation to accounting periods ending after 31st March 1996; and

(b)for the purposes of income tax, in relation to the year 1996-97 and subsequent years of assessment.

(10)In this section “the appointed day” means such day as the Treasury may by order appoint, and different days may be appointed under this subsection for different purposes.

[F28160 Investments in housing.U.K.

Schedule 30 to this Act (which makes provision conferring relief from corporation tax on companies that invest in housing) shall have effect.]

F29161 Venture capital trusts: control of companies etc.U.K.

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

Insurance policiesU.K.

162 Qualifying life insurance policies: certification.U.K.

(1)Section 55 of the M7Finance Act 1995 (removal of certification requirements for qualifying policies with respect to any time on or after 5th May 1996 etc) shall have effect—

(a)with the substitution for “5th May 1996”, wherever occurring, of “the appointed date”; and

(b)with the addition of the following subsection after subsection (8)—

“(9)In this section “the appointed date” means such date as may be specified for the purpose in an order made by the Board.”

(2)In Schedule 15 to the Taxes Act 1988 (qualifying policies) paragraphs 24(2A) and 25(2) shall have effect with the substitution for “5th May 1996” of “ the appointed date for the purposes of section 55 of the Finance Act 1995 (removal of certification requirements) ”.

Insurance companiesU.K.

F30163 Life assurance business losses.U.K.

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

164 Limits on relief for expenses.U.K.

F31(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F32(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F33(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F34(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5)Subject to subsection (6) below, this section has effect in relation to accounting periods beginning on or after 1st January 1996.

F35(6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

165 Annual payments under insurance policies: deductions.U.K.

(1)In section 337 of the Taxes Act 1988 (deductions in computing income), the following subsections shall be inserted after subsection (2)—

“(2A)In computing any profits or losses of a company in accordance with the provisions of this Act applicable to Case I of Schedule D, subsection (2)(b) above shall not prevent the deduction of any annuity or other annual payment which is payable by a company wholly or partly in satisfaction of any claim under an insurance policy in relation to which the company is the insurer.

(2B)The reference in subsection (2A) above to an annuity payable wholly or partly in satisfaction of a claim under an insurance policy shall be taken, in relation to an insurance company (within the meaning of Chapter I of Part XII), to include a reference to every annuity payable by that company; and the references in sections 338(2) and 434B(2) to an annuity paid wholly or partly as mentioned in subsection (2A) above shall be construed accordingly.”

F36(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F37(3)In section 434B of that Act (treatment of interest and annuities in the case of insurance companies), subsection (1) shall cease to have effect; and in subsection (2), for the words from the beginning to “mentioned in subsection (1) above” there shall be substituted—

“(2)Nothing in section 337(2A) or 338(2) shall be construed as preventing any annuity or other annual payment which is paid wholly or partly as mentioned in section 337(2A)”.]

(4)Subject to subsection (5) below, this section has effect in relation to accounting periods beginning on or after 1st January 1996.

(5)In relation to any accounting period beginning on or after 1st January 1996 but ending before 1st April 1996, this section shall have effect as if any reference in provisions inserted by this section to an annuity payable or paid by an insurance company included a reference to any such interest as was mentioned in section 434B(1) of the Taxes Act 1988 before its repeal by virtue of this section.

F38166 Equalisation reserves.U.K.

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

167 Industrial assurance business.U.K.

(1)In section 432 of the Taxes Act 1988, subsection (2) (industrial assurance business treated as separate business for the purposes of Chapter I of Part XII) shall cease to have effect.

F39(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F40(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F41(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5)In Schedule 14 to the Taxes Act 1988 (ancillary provisions about relief in respect of life assurance premiums), in paragraph 8, at the beginning of sub-paragraph (4) (policy which is varied so as to increase benefits, etc. to be treated as issued after 13th March 1984) there shall be inserted “ Subject to sub-paragraph (8) below, ”.

(6)After sub-paragraph (7) of that paragraph there shall be inserted the following sub-paragraph—

“(8)Sub-paragraph (4) above does not apply in the case of a variation so as to increase the benefits secured, if the variation is made—

(a)on or after such day as the Board may by order appoint, and

(b)in consideration of a change in the method of payment of premiums from collection by a person collecting premiums from house to house to payment by a different method.”

(7)In Schedule 15 to the Taxes Act 1988 (qualifying policies)—

(a)in paragraph 1(6) (calculation of amount included in premiums of whole life and term insurances in respect of their payment otherwise than annually), for “and if the policy is issued in the course of an industrial assurance business,” there shall be substituted “ sand if the policy provides for payment otherwise than annually without providing for the amount of the premiums if they are paid annually, ”; and

(b)in paragraph 2(2) (the equivalent calculation for endowment assurances), for “issued in the course of an industrial assurance business” there shall be substituted “ that provides for the payment of premiums otherwise than annually without providing for the amount of the premiums if they are paid annually, ”.

(8)After paragraph 8 of that Schedule there shall be inserted the following paragraph—

“8A(1)Paragraphs 7 and 8 above shall have effect in relation to any policy issued on or after the appointed day as if the references to the issue of a policy in the course of an industrial assurance business were references to the issue of a policy by any company in a case in which—

(a)the company, before that day and in the course of such a business, issued any policy which was a qualifying policy by virtue of either of those paragraphs; and

(b)the policies which on 28th November 1995 were being offered by the company as available to be issued included policies of the same description as the policy issued on or after the appointed day.

(2)In this paragraph “the appointed day” means such day as the Board may by order appoint.”

(9)In paragraph 18(3) of that Schedule (certain variations of a policy not to affect whether policy is a qualifying policy), after paragraph (b) there shall be inserted “or

(c)any variation so as to increase the benefits secured or reduce the premiums payable which is effected—

(i)on or after such day as the Board may by order appoint, and

(ii)in consideration of a change in the method of payment of premiums from collection by a person collecting premiums from house to house to payment by a different method.”

F42(10). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(11)Subsection (4) above shall come into force on such day as the Board may by order appoint.

(12)Subsection (7) above shall have effect in relation to policies issued on or after such day as the Board may by order appoint.

168 Capital redemption business.U.K.

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

F44(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F43(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F45(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F45(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F45(6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F46169. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

[F47170 Time for amending and enquiring into returns.U.K.

(1)After section 11AB of the M8Taxes Management Act 1970 there shall be inserted the following sections—

11AC“ Modifications of sections 11AA and 11AB in relation to non-annual accounting of general insurance business.

(1)This section applies in any case where a company carrying on insurance business in any period delivers a return for that period under section 11 of this Act which is based wholly or partly on accounts which the company is required or permitted to draw up using the method described in paragraph 52 of Schedule 9A to the M9Companies Act 1985 (accounting for general insurance business on a non-annual basis).

(2)Where this section applies, section 11AA(2) of this Act shall have effect as if after paragraph (b) there were added “and

(c1)where a company has delivered a return which is based wholly or partly on accounts drawn up as mentioned in section 11AC(1) of this Act, then, at any time before the end of the period of twelve months beginning with the date on which any particular technical provision constituted in the case of those accounts as described in paragraph 52 of Schedule 9A to the M10Companies Act 1985 is replaced as described in sub-paragraph (4) of that paragraph, the company may by notice to an officer of the Board so amend its self-assessment as to give effect to any amendments to the return—

(i)which arise from the replacement of that technical provision, and

(ii)which the company has notified to such an officer.”

(3)Where this section applies, section 11AB of this Act shall have effect—

(a)as if in subsection (1)(b) after “subsection (2)(b)” there were inserted “or (c1)”; and

(b)as if in subsection (2) for the words from “is” to the end of paragraph (b) there were substituted—

“(a1)in the case of a return (whenever delivered) which is based wholly or partly on accounts drawn up as mentioned in section 11AC(1) of this Act, is whichever of the following periods ends the later, that is to say—

(i)the period of two years beginning with the date (or, if there is more than one such date, the latest date) on which any technical provision constituted in the case of those accounts as described in paragraph 52 of Schedule 9A to the Companies Act 1985 is replaced as mentioned in sub-paragraph (4) of that paragraph; or

(ii)the period ending with the quarter day next following the first anniversary of the day on which the return was delivered; and

(b1)in the case of an amendment of such a return—

(i)if the amendment is made on or before the filing date, is the period of twelve months beginning with that date; or

(ii)if the amendment is made after that date, is the period ending with the quarter day next following the first anniversary of the day on which the amendment was made;”.

11AD Modifications of sections 11AA and 11AB for insurance companies with non-annual actuarial investigations.

(1)This section applies in any case where a return under section 11 of this Act is delivered by an insurance company which is permitted by an order under section 68 of the M11Insurance Companies Act 1982 to cause investigations to be made into its financial condition less frequently than is required by section 18 of that Act.

(2)Where this section applies, section 11AA(2) of this Act shall have effect as if, after paragraph (b), there were added “and

(c2)where a company falling within section 11AD(1) of this Act has delivered a return for any period, then, at any time before the end of the period of twelve months beginning with the date as at which the relevant investigation is carried out, that is to say—

(i)if the return is for a period as at the end of which there is carried out an investigation under section 18 of the M12Insurance Companies Act 1982 into the financial condition of the company, that investigation, or

(ii)if the return is not for such a period, the first such investigation to be made into the financial condition of the company as at the end of a subsequent period,

the company may by notice to an officer of the Board so amend its self-assessment as to give effect to any amendments to its return which arise from that investigation and which the company has notified to such an officer.”

(3)Where this section applies, section 11AB of this Act shall have effect—

(a)as if in subsection (1)(b) after “subsection (2)(b)” there were inserted “or (c2)”; and

(b)as if in subsection (2) for the words from “is” to the end of paragraph (b) there were substituted—

“(a2)in the case of a return delivered at any time by a company falling within section 11AD(1) of this Act, is the period of two years beginning with the date as at which the relevant investigation, as defined in section 11AA(2)(c2) of this Act, is carried out; and

(b2)in the case of an amendment of such a return—

(i)if the amendment is made on or before the filing date, is the period of twelve months beginning with that date; or

(ii)if the amendment is made after that date, is the period ending with the quarter day next following the first anniversary of the day on which the amendment was made;”.

11AE Modifications of sections 11AA and 11AB for friendly societies with non-annual actuarial investigations.

(1)This section applies in any case where a return under section 11 of this Act is delivered by a friendly society which is required by section 47 of the M13Friendly Societies Act 1992 to cause an investigation to be made into its financial condition at least once in every period of three years.

(2)Where this section applies, section 11AA(2) of this Act shall have effect as if, after paragraph (b), there were added “and

(c3)where a friendly society falling within section 11AE(1) of this Act has delivered a return for any period, then, at any time before the end of the period of fifteen months beginning with the date as at which the relevant investigation is carried out, that is to say—

(i)if the return is for a period as at the end of which there is carried out an investigation under section 47 of the M14Friendly Societies Act 1992 into the financial condition of the society, that investigation, or

(ii)if the return is not for such a period, the first such investigation to be made into the financial condition of the society as at the end of a subsequent period,

the society may by notice to an officer of the Board so amend its self-assessment as to give effect to any amendments to its return which arise from that investigation and which the society has notified to such an officer.”

(3)Where this section applies, section 11AB of this Act shall have effect—

(a)as if in subsection (1)(b) after “subsection (2)(b)” there were inserted “or (c3)”; and

(b)as if in subsection (2) for the words from “is” to the end of paragraph (b) there were substituted—

“(a3)in the case of a return delivered at any time by a friendly society falling within section 11AE(1) of this Act, is the period of twenty seven months beginning with the date as at which the relevant investigation, as defined in section 11AA(2)(c3) of this Act, is carried out; and

(b3)in the case of an amendment of such a return—

(i)if the amendment is made on or before the filing date, is the period of twelve months beginning with that date; or

(ii)if the amendment is made after that date, is the period ending with the quarter day next following the first anniversary of the day on which the amendment was made;”.”

(2)The amendment made by subsection (1) above shall have effect as respects accounting periods ending on or after the day appointed under section 199 of the M15Finance Act 1994 for the purposes of Chapter III of Part IV of that Act (self-assessment management provisions).]

Friendly societiesU.K.

F48171 Life or endowment business.U.K.

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

Personal pension schemesU.K.

F49172 Return of contributions on or after death of member.U.K.

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

Participators in close companiesU.K.

173 Loans to participators etc.U.K.

F50(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F50(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F50(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F50(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5)In section 826(4) of that Act (interest on repayment of tax by virtue of section 419), for paragraph (a) there shall be substituted the following paragraph—

“(a)the date when the entitlement to relief in respect of the repayment accrued, that is to say—

(i)where the repayment of the loan or advance (or part thereof) occurred on or after the day mentioned in section 419(4A), the date nine months after the end of that accounting period; and

(ii)in any other case, the date nine months after the end of the accounting period in which the loan or advance was made;

or”.

(6)This section has effect in relation to any loan or advance made in an accounting period ending on or after 31st March 1996.

174 Attribution of gains to participators in non-resident companies.U.K.

(1)Section 13 of the M16Taxation of Chargeable Gains Act 1992 (attribution of gains to members of non-resident companies) shall be amended in accordance with subsections (2) to (9) below.

(2)In subsection (2) (persons subject to charge on gain to company), for “holds shares” there shall be substituted “ is a participator ”.

(3)For subsections (3) and (4) (part of gain attributed to person subject to charge) there shall be substituted the following subsections—

“(3)That part shall be equal to the proportion of the gain that corresponds to the extent of the participator’s interest as a participator in the company.

(4)Subsection (2) above shall not apply in the case of any participator in the company to which the gain accrues where the aggregate amount falling under that subsection to be apportioned to him and to persons connected with him does not exceed one twentieth of the gain.”

(4)In subsection (5), paragraph (a) (section not to apply where gain distributed within two years) shall be omitted; and after that subsection there shall be inserted the following subsection—

“(5A)Where—

(a)any amount of capital gains tax is paid by a person in pursuance of subsection (2) above, and

(b)an amount in respect of the chargeable gain is distributed (either by way of dividend or distribution of capital or on the dissolution of the company) within 2 years from the time when the chargeable gain accrued to the company,

that amount of tax (so far as neither reimbursed by the company nor applied as a deduction under subsection (7) below) shall be applied for reducing or extinguishing any liability of that person to income tax in respect of the distribution or (in the case of a distribution falling to be treated as a disposal on which a chargeable gain accrues to that person) to any capital gains tax in respect of the distribution.”

(5)In subsection (7) (deduction of tax paid in computing gain on shares in the company)—

(a)for “not reimbursed by the company)” there shall be inserted “ neither reimbursed by the company nor applied under subsection (5A) above for reducing any liability to tax) ”; and

(b)for “the shares by reference to which the tax was paid” there shall be substituted “ any asset representing his interest as a participator in the company. ”

(6)After subsection (7) there shall be inserted the following subsection—

“(7A)In ascertaining for the purposes of subsection (5A) or (7) above the amount of capital gains tax or income tax chargeable on any person for any year on or in respect of any chargeable gain or distribution—

(a)any such distribution as is mentioned in subsection (5A)(b) above and falls to be treated as income of that person for that year shall be regarded as forming the highest part of the income on which he is chargeable to tax for the year;

(b)any gain accruing in that year on the disposal by that person of any asset representing his interest as a participator in the company shall be regarded as forming the highest part of the gains on which he is chargeable to tax for that year;

(c)where any such distribution as is mentioned in subsection (5A)(b) above falls to be treated as a disposal on which a gain accrues on which that person is so chargeable, that gain shall be regarded as forming the next highest part of the gains on which he is so chargeable, after any gains falling within paragraph (b) above; and

(d)any gain treated as accruing to that person in that year by virtue of subsection (2) above shall be regarded as the next highest part of the gains on which he is so chargeable, after any gains falling within paragraph (c) above.”

(7)In subsection (9) (cases where person charged is a company)—

(a)for “the person owning any of the shares in the company” there shall be substituted “ a person who is a participator in the company ”; and

(b)for the words from “to the shares” onwards there shall be substituted “ to the participating company’s interest as a participator in the company to which the gain accrues shall be further apportioned among the participators in the participating company according to the extent of their respective interests as participators, and subsection (2) above shall apply to them accordingly in relation to the amounts further apportioned, and so on through any number of companies. ”

(8)In subsection (10) (application to trustees), for “owning shares in the company” there shall be substituted “ who are participators in the company, or in any company amongst the participators in which the gain is apportioned under subsection (9) above, ”.

(9)After subsection (11) there shall be inserted the following subsections—

“(12)In this section “participator”, in relation to a company, has the meaning given by section 417(1) of the Taxes Act for the purposes of Part XI of that Act (close companies).

(13)In this section—

(a)references to a person’s interest as a participator in a company are references to the interest in the company which is represented by all the factors by reference to which he falls to be treated as such a participator; and

(b)references to the extent of such an interest are references to the proportion of the interests as participators of all the participators in the company (including any who are not resident or ordinarily resident in the United Kingdom) which on a just and reasonable apportionment is represented by that interest.

(14)For the purposes of this section, where—

(a)the interest of any person in a company is wholly or partly represented by an interest which he has under any settlement (“his beneficial interest”), and

(b)his beneficial interest is the factor, or one of the factors, by reference to which that person would be treated (apart from this subsection) as having an interest as a participator in that company,

the interest as a participator in that company which would be that person’s shall be deemed, to the extent that it is represented by his beneficial interest, to be an interest of the trustees of the settlement (and not of that person), and references in this section, in relation to a company, to a participator shall be construed accordingly.

(15)Any appeal under section 31 of the Management Act involving any question as to the extent for the purposes of this section of a person’s interest as a participator in a company shall be to the Special Commissioners.”

(10)In paragraph 1(3) of Schedule 5 to the M17Taxation of Chargeable Gains Act 1992 (application of section 86 to section 13 gains)—

(a)in paragraph (a), for “hold shares in a company which originate” there shall be substituted “ are participators in a company in respect of property which originates ”;

(b)in paragraph (b), for “the shares” there shall be substituted “ so much of their interest as participators as arises from that property ”; and

(c)at the end there shall be added—

“Subsections (12) and (13) of section 13 shall apply for the purposes of this sub-paragraph as they apply for the purposes of that section.”

(11)This section applies to gains accruing on or after 28th November 1995.

Cancellation of tax advantagesU.K.

F51175 Transactions in certain securities.U.K.

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

Chargeable gains: reliefsU.K.

[F52176 Retirement relief: age limits.U.K.

(1)In each of sections 163 and 164 of, and paragraph 5 of Schedule 6 to, the M18Taxation of Chargeable Gains Act 1992 (retirement relief), for “the age of 55”, wherever occurring, there shall be substituted “ the age of 50 ”.

(2)The amendments made by this section shall apply in relation to disposals on or after 28th November 1995.]

177 Reinvestment relief on disposal of qualifying corporate bond.U.K.

Section 164A of the Taxation of Chargeable Gains Act 1992 (re-investment relief) shall have effect, and be deemed always to have had effect, as if the following subsections were inserted after subsection (2)—

“(2A)Where the chargeable gain referred to in subsection (1)(a) above is one which (apart from this section) would be deemed to accrue by virtue of section 116(10)(b)—

(a)any reduction falling to be made by virtue of subsection (2)(a) above shall be treated as one made in the consideration mentioned in section 116(10)(a), instead of in the consideration for the disposal of the asset disposed of; but

(b)if the disposal on which that gain is deemed to accrue is a disposal of only part of the new asset, it shall be assumed, for the purpose only of making a reduction affecting the amount of that gain—

(i)that the disposal is a disposal of the whole of a new asset,

(ii)that the gain accruing on that disposal relates to an old asset consisting in the corresponding part of what was in fact the old asset, and

(iii)that the corresponding part of the consideration deemed to be given for what was in fact the old asset is taken to be the consideration by reference to which the amount of that gain is computed;

and in this subsection “new asset” and “old asset” have the same meanings as in section 116.

(2B)Where a chargeable gain accrues in accordance with subsection (12) of section 116, this Chapter shall have effect—

(a)as if that gain were a gain accruing on the disposal of an asset; and

(b)in relation to that deemed disposal, as if references in this Chapter to the consideration for the disposal were references to the sum of money falling, apart from this Chapter, to be used in computing the gain accruing under that subsection.”

Special casesU.K.

F53178 Sub-contractors in the construction industry.U.K.

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

F54179. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

F55180. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

181 Overseas petroleum.U.K.

(1)In subsection (1) of section 196 of the M19Taxation of Chargeable Gains Act 1992 (interpretation of sections 194 and 195), for “licence” there shall be substituted “ UK licence ”.

(2)After subsection (1) of section 196 of that Act there shall be inserted the following subsection—

“(1A)For the purposes of section 194 a licence other than a UK licence relates to an undeveloped area at any time if, at that time—

(a)no development has actually taken place in any part of the licensed area; and

(b)no condition for the carrying out of development anywhere in that area has been satisfied—

(i)by the grant of any consent by the authorities of a country or territory exercising jurisdiction in relation to the area; or

(ii)by the approval or service on the licensee, by any such authorities, of any programme of development.”;

and in subsection (2) of that section for “subsection (1) above” there shall be substituted “ subsections (1) and (1A) above ”.

(3)For subsection (5) of section 196 of that Act there shall be substituted the following subsections—

“(5)In sections 194 and 195 and this section—

• “foreign oil concession” means any right to search for or win overseas petroleum, being a right conferred or exercisable (whether or not by virtue of a licence) in relation to a particular area;

• “interest” in relation to a licence, includes, where there is an agreement which—

  (a)

  relates to oil from the whole or any part of the licensed area, and

  (b)

  was made before the extraction of the oil to which it relates,

  any entitlement under that agreement to, or to a share of, either that oil or the proceeds of its sale;

• “licence” means any UK licence or foreign oil concession;

• “licensed area” (subject to subsection (4) above)—

  (a)

  in relation to a UK licence, has the same meaning as in Part I of the M20Oil Taxation Act 1975; and

  (b)

  in relation to a foreign oil concession, means the area to which the concession applies;

• “licensee”—

  (a)

  in relation to a UK licence, has the same meaning as in Part I of the Oil Taxation Act 1975; and

  (b)

  in relation to a foreign oil concession, means the person with the concession or any person having an interest in it;

• “oil”—

  (a)

  except in relation to a UK licence, means any petroleum (within the meaning of the M21Petroleum (Production) Act 1934); and

  (b)

  in relation to such a licence, has the same meaning as in Part I of the Oil Taxation Act 1975;

• “overseas petroleum” means any oil that exists in its natural condition at a place to which neither the M22Petroleum (Production) Act 1934 nor the M23Petroleum (Production) Act (Northern Ireland) 1964 applies; and

• “UK licence” means a licence within the meaning of Part I of the M24Oil Taxation Act 1975.

(5A)References in sections 194 and 195 to a part disposal of a licence shall include references to the disposal of any interest in a licence.”

(4)Subsections (1) to (3) above shall have effect in relation to any disposal on or after 13th September 1995 and subsection (3) shall also have effect, and be deemed always to have had effect, for the construction of section 195 of the M25Taxation of Chargeable Gains Act 1992 in its application to disposals before that date.

(5)Where enactments re-enacted in the M26Taxation of Chargeable Gains Act 1992 apply, instead of that Act, in the case of any disposal before 13th September 1995, this section shall have effect as if it required amendments equivalent to those made by subsection (3) above to have effect, and be deemed always to have had effect, for the construction of any enactment corresponding to section 195 of that Act.

182 Controlled foreign companies.U.K.

Schedule 36 to this Act (which contains amendments of Chapter IV of Part XVII of the Taxes Act 1988) shall have effect in relation to accounting periods of a controlled foreign company, within the meaning of that Chapter, beginning on or after 28th November 1995.