SCHEDULES

Section 13.

SCHEDULE 1U.K. Gaming duty: administration, enforcement etc

Part IU.K. The gaming duty register

The RegisterU.K.

1U.K.The Commissioners shall establish and maintain a register of persons involved in the provision of dutiable gaming.

InterpretationU.K.

2(1)In this Part of this Schedule—U.K.

• “the register” means the gaming duty register;

• “registered person” means a person registered on the register; and

• “registrable person” has the meaning given by paragraph 3 below.

(2)For the purposes of this Part of this Schedule premises in the United Kingdom are “unlicensed premises” unless they are premises in Great Britain—

(a)in respect of which a licence under the M1Gaming Act 1968 is for the time being in force, or

(b)in respect of which a club or miners’ welfare institute is for the time being registered under Part II of that Act.

(3)References in this Part of this Schedule to being a member of a group and to being the representative member of a group shall be construed in accordance with paragraph 8 below.

RegistrationU.K.

3(1)The Commissioners shall, on receipt of a valid application made by—U.K.

(a)a registrable person, or

(b)a person who expects dutiable gaming to take place and to become a registrable person if it does,

add that person to the register.

(2)The following provisions of this paragraph have effect for the interpretation of sub-paragraph (1) above.

(3)A valid application is one which is made in such form and manner, and is accompanied by such information, as the Commissioners may require.

(4)Subject to sub-paragraph (5) below—

(a)the holder of a licence under the M2Gaming Act 1968 is a registrable person if and for so long as dutiable gaming takes place on the premises in respect of which the licence is for the time being in force;

(b)a provider of unlicensed premises is a registrable person if and for so long as dutiable gaming takes place on those premises;

(c)a person is a registrable person if and for so long as he is concerned in the organisation or management of dutiable gaming that takes place on unlicensed premises.

(5)A body corporate cannot be a registrable person if it—

(a)is a member of a group, but

(b)is not the representative member of that group.

(6)A body corporate which—

(a)is the representative member of a group, and

(b)is not a registrable person in its own right,

is a registrable person if another body corporate which is a member of that group would be a registrable person but for sub-paragraph (5) above.

Cancellation of registrationU.K.

4(1)This paragraph has effect for determining when a registered person is to be removed by the Commissioners from the register.U.K.

(2)Where the Commissioners receive a valid notice from a registered person stating that he has ceased to be a registrable person, he shall be removed from the register.

(3)Where the Commissioners receive a valid notice from a registered person stating that he will, from a time specified in the notice, cease to be a registrable person, he shall be removed from the register with effect from that time.

(4)Where—

(a)a registered person has been added to the register on an application made under paragraph 3(1)(b) above, and

(b)the Commissioners receive a valid notice from him stating—

(i)that the dutiable gaming which he expected to take place has not taken place, and

(ii)that he no longer expects it to take place,

he shall be removed from the register.

(5)Where it appears to the Commissioners that a registered person has ceased to be a registrable person, he shall be removed from the register.

(6)A registered person shall be removed from the register if—

(a)he has been added to the register on an application made under paragraph 3(1)(b) above, and

(b)it appears to the Commissioners that the dutiable gaming which he expected to take place has not taken place and can no longer be expected to take place.

(7)For the purposes of this paragraph, a valid notice is one which is given in such form and manner, and accompanied by such information, as the Commissioners may require.

Penalties in connection with registrationU.K.

5(1)There is a contravention of this sub-paragraph by every person who is a responsible person in relation to any premises if—U.K.

(a)dutiable gaming takes place on those premises on or after 1st October 1997; and

(b)at the time when the gaming takes place, no person by whom those premises are notifiable is registered on the register.

(2)For the purposes of this paragraph, a person is a responsible person in relation to any premises if—

(a)he is a registrable person; and

(b)those premises are notifiable by him.

(3)Where a person contravenes sub-paragraph (1) above, that contravention shall attract a penalty under section 9 of the M3Finance Act 1994 (civil penalties) and shall also attract daily penalties.

(4)References in this paragraph to premises being notifiable are references to them being notifiable for the purposes of paragraph 6 below.

Notification of premisesU.K.

6(1)This paragraph has effect for determining the premises to be specified in a registered person’s entry on the register.U.K.

(2)A person who makes an application under paragraph 3(1) above shall, on making that application, notify the Commissioners of all the premises which—

(a)are notifiable by him, or

(b)in a case where his application is made under paragraph 3(1)(b), will become notifiable by him if the expected gaming takes place;

and the Commissioners shall, on registering him on the register, cause those premises to be specified in his entry on the register.

(3)Where any premises not currently notified by a registered person become notifiable by him—

(a)he shall notify the Commissioners of those premises, and

(b)the Commissioners shall cause those premises to be specified in his entry on the register.

(4)Subject to sub-paragraph (5) below, where any premises currently notified by a registered person cease to be notifiable by him—

(a)he shall notify the Commissioners of that fact, and

(b)they shall cause those premises to be no longer specified in his entry on the register.

(5)A registered person is not required to notify the Commissioners as mentioned in sub-paragraph (4) above in a case where—

(a)he gives notice to the Commissioners under paragraph 4(2) above; or

(b)the premises ceasing to be notifiable by him so cease in accordance with a notification previously given by him to the Commissioners under sub-paragraph (6) below.

(6)Where—

(a)any premises are currently notified by a registered person, and

(b)he notifies the Commissioners of the date on which those premises will cease to be notifiable by him,

the Commissioners shall ensure that those premises cease, with effect from that date, to be specified in his entry on the register.

(7)Subject to sub-paragraph (8) below, where—

(a)any premises are currently notified by a registered person,

(b)that person has been added to the register on an application made under paragraph 3(1)(b) above,

(c)any of the dutiable gaming which he expected to take place has not taken place,

(d)he no longer expects that gaming to take place, and

(e)in consequence of events turning out as mentioned in paragraphs (c) and (d) above, those premises have not and will not become notifiable by him,

he shall notify the Commissioners accordingly and they shall cause those premises to be no longer specified in his entry on the register.

(8)A registered person is not required to notify the Commissioners as mentioned in sub-paragraph (7) above in a case where he gives notice to the Commissioners under paragraph 4(4) above.

(9)For the purposes of this paragraph premises are currently notified by any person at any time if at that time they are specified in his entry on the register.

(10)For the purposes of this paragraph, in the case of a person who is not a body corporate, or who is a body corporate that is not a member of any group—

(a)premises in respect of which a licence under the M4Gaming Act 1968 is for the time being in force are notifiable by him if and for so long as—

(i)he is the holder of the licence, and

(ii)dutiable gaming takes place on those premises;

(b)unlicensed premises of which he is a provider are notifiable by him if and for so long as dutiable gaming takes place on those premises; and

(c)any unlicensed premises of which he is not a provider are notifiable by him if and for so long as—

(i)dutiable gaming takes place on those premises, and

(ii)he is concerned in the organisation or management of that gaming.

(11)For the purposes of this paragraph, in the case of a body corporate which is the representative member of a group—

(a)premises in respect of which a licence under the Gaming Act 1968 is for the time being in force are notifiable by the representative member if and for so long as—

(i)it, or another body corporate which is a member of that group, is the holder of the licence, and

(ii)dutiable gaming takes place on those premises;

(b)unlicensed premises of which the representative member or any such other body corporate is a provider are notifiable by the representative member if and for so long as dutiable gaming takes place on those premises; and

(c)unlicensed premises which are not notifiable by the representative member by virtue of paragraph (b) above are notifiable by it if and for so long as—

(i)dutiable gaming takes place on those premises, and

(ii)it or any such other body corporate is concerned in the organisation or management of that gaming.

Penalties in connection with notificationU.K.

7(1)Where, in contravention of paragraph 6(2) above, a person fails to notify the Commissioners of any premises, that failure shall attract a penalty under section 9 of the M5Finance Act 1994 (civil penalties).U.K.

(2)Where—

(a)by virtue of paragraph 6(3), (4) or (7) above, a person at any time becomes subject to a requirement to notify the Commissioners of any premises or fact, and

(b)he fails to comply with that requirement before the end of the period of seven days beginning with the day on which that time falls,

that failure shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties) and shall also attract daily penalties for every day after the end of that period on which the failure to notify continues.

GroupsU.K.

8(1)Two or more bodies corporate are eligible to be treated as members of a group for the purposes of this Part of this Schedule if each is resident or has an established place of business in the United Kingdom and—U.K.

(a)one of them controls each of the others;

(b)one person (whether a body corporate or an individual) controls all of them; or

(c)two or more individuals carrying on a business in partnership control all of them.

(2)Subject to sub-paragraph (3) below, where an application for the purpose is made to the Commissioners with respect to two or more bodies corporate eligible to be treated as members of a group, then, from such date as may be specified in the application—

(a)they shall be so treated for the purposes of this Part of this Schedule; and

(b)such one of them as may be specified in the application shall be the representative member for those purposes.

(3)The Commissioners may refuse an application under sub-paragraph (2) above if, and only if, it appears to them necessary to do so for the protection of the revenue from gaming duty.

(4)Where any bodies corporate are treated as members of a group for the purposes of this Part of this Schedule and an application for the purpose is made to the Commissioners, then, from such time as may be specified in the application—

(a)a further body eligible to be so treated shall be included among the bodies so treated; or

(b)a body corporate shall be excluded from the bodies so treated; or

(c)another member of the group shall be substituted as the representative member; or

(d)the bodies corporate shall no longer be treated as members of a group.

(5)If it appears to the Commissioners necessary to do so for the protection of the revenue from gaming duty, they may—

(a)refuse any application made for the purpose mentioned in paragraph (a) or (c) of sub-paragraph (4) above; or

(b)refuse any application made for the purpose mentioned in paragraph (b) or (d) of that sub-paragraph in a case that does not appear to them to fall within sub-paragraph (6)(a) and (b) below.

(6)Where—

(a)a body corporate is treated as a member of a group for the purposes of this Part of this Schedule by virtue of being controlled by any person, and

(b)it appears to the Commissioners that it has ceased to be so controlled,

they shall, by notice given to that person, terminate that treatment from such date as may be specified in the notice.

(7)Where—

(a)a notice under sub-paragraph (6) above is given to a body corporate which is the representative member of a group,

(b)there are two or more other bodies corporate who will continue to be treated as members of the group after the time when that notice takes effect, and

(c)none of those bodies corporate is substituted from that time, or from before that time, as the representative member of the group in pursuance of an application under sub-paragraph (4)(c) above,

the Commissioners shall, by notice given to such one of the bodies corporate mentioned in paragraph (b) above as they think fit, substitute that body corporate as the representative member as from that time.

(8)Where a notice under sub-paragraph (6) above is given to one member of a group of which there is only one other member, then (subject to any further application under this paragraph) the other member shall also cease, from the time specified in the notice, to be treated for the purposes of this Part of this Schedule as a member of the group.

(9)An application under this paragraph with respect to any bodies corporate—

(a)must be made by one of those bodies or by the person controlling them; and

(b)must be made not less than 90 days before the date from which it is to take effect, or at such later time as the Commissioners may allow.

(10)For the purposes of this paragraph a body corporate shall be taken to control another body corporate if—

(a)it is empowered by statute to control that body’s activities; or

(b)it is that body’s holding company within the meaning of section 736 of the M6Companies Act 1985;

and an individual or individuals shall be taken to control a body corporate if (were he or they a company) he or they would be that body’s holding company within the meaning of that Act.

(11)Sections 14 to 16 of the M7Finance Act 1994 (review and appeals) shall have effect in relation to any refusal by the Commissioners of an application under sub-paragraph (2) or (4) above as if that refusal were a decision of a description specified in Schedule 5 to that Act.

Part IIU.K. Other provisions

Accounting periodsU.K.

9(1)Where, in the case of any premises, the Commissioners and every relevant person so agree, the provisions of sections 10 to 15 of this Act and this Schedule shall have effect in relation to those premises as if accounting periods for the purposes of those provisions were periods of six months beginning on such dates other than 1st October and 1st April as may be specified in the agreement.U.K.

(2)For the purposes of sub-paragraph (1) above, a person is a relevant person in relation to any premises if—

(a)he is registered on the gaming duty register, and

(b)the entry relating to him on the register specifies those premises.

(3)The Commissioners shall not enter into an agreement under this paragraph for a change in the date on which an accounting period begins in relation to any premises unless they are satisfied that appropriate transitional provision for the protection of the revenue is contained in the agreement.

(4)The provision which, for the purposes of sub-paragraph (3) above, may be contained in any agreement under this paragraph shall include any such provision as may be contained in regulations under section 11(5) of this Act.

(5)Sections 14 to 16 of the Finance Act 1994 (review and appeals) shall have effect in relation to any refusal of the Commissioners to enter into an agreement under this paragraph, or to enter into such an agreement on particular terms, as if that refusal were a decision of a description specified in Schedule 5 to that Act.

Directions as to the making of returnsU.K.

10(1)The Commissioners may give directions as to the making of returns in connection with gaming duty by—U.K.

(a)persons registered on the gaming duty register;

(b)persons liable to pay any gaming duty.

(2)Directions under this paragraph may, in particular, make provision as to—

(a)when any returns are to be made;

(b)the persons by whom any returns are to be made;

(c)the form in which any returns are to be made;

(d)the information to be given in any returns;

(e)the declarations to be contained in returns and the manner in which returns are to be authenticated;

(f)returns being treated as not made until received by the Commissioners;

(g)the places to which returns are to be made.

(3)Where a person fails to comply with any provision of a direction given under this paragraph, that failure shall attract a penalty under section 9 of the M8Finance Act 1994 (civil penalties) and shall also attract daily penalties.

RegulationsU.K.

11(1)The Commissioners may make regulations providing for any matter for which provision appears to them to be necessary or expedient for the administration or enforcement of gaming duty, or for the protection of the revenue from that duty.U.K.

(2)Regulations under this paragraph may, in particular, include provision as to the giving and operation of directions under section 11(6) of this Act.

(3)Where any person contravenes or fails to comply with any of the provisions of any regulations under this paragraph, his contravention or failure to comply shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties).

OffencesU.K.

12(1)Any person who obstructs any officer in the exercise of his functions in relation to gaming duty shall be guilty of an offence and liable, on summary conviction, to a penalty of level 5 on the standard scale.U.K.

(2)Any person who—

(a)in connection with gaming duty, makes any statement which he knows to be false in a material particular or recklessly makes any statement which is false in a material particular,

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

(c)is knowingly concerned in, or in the taking of steps with a view to, the fraudulent evasion (by him or any other person) of any gaming duty or of any obligation to make a payment on account of gaming duty,

shall be guilty of an offence.

(3)A person guilty of an offence under sub-paragraph (2) above shall be liable—

(a)on summary conviction, to a penalty of—

(i)the statutory maximum, or

(ii)if greater, three times the duty or other amount which is unpaid or the payment of which is sought to be avoided,

or to imprisonment for a term not exceeding six months, or to both;

(b)on conviction on indictment, to a penalty of any amount, or to imprisonment for a term not exceeding—

(i)two years in the case of an offence by virtue of sub-paragraph (2)(a) above, and

(ii)seven years in any other case,

or to both.

(4)Section 27 of the M9Betting and Gaming Duties Act 1981 (offences by bodies corporate) shall have effect for the purposes of any offence under this paragraph as it has effect for the purposes of the offences mentioned in that section.

(5)Where a person has committed an offence under sub-paragraph (2) above, all designated items related to the relevant gaming shall be liable to forfeiture if—

(a)at the time the offence was committed that person was not registered on the gaming duty register; and

(b)the relevant gaming did not take place on premises which, at the time the offence was committed, were specified in any person’s entry on that register.

(6)In sub-paragraph (5) above, “the relevant gaming” means—

(a)in relation to an offence under sub-paragraph (2)(a) or (b) above, any gaming to which the false statement or (as the case may be) the false document related; and

(b)in relation to an offence under sub-paragraph (2)(c) above, any gaming on the premises the gaming duty on which was, or was sought to be, fraudulently evaded.

(7)For the purposes of sub-paragraph (5) above, the designated items related to any gaming are—

(a)any furniture, machines and other articles and equipment which—

(i)are on the premises where the gaming takes place; and

(ii)have been or are being, or are capable of being, used for or in connection with gaming;

and

(b)any cash and gaming chips in the custody or under the control of any person who—

(i)is a provider of the premises on which the gaming takes place, or

(ii)is in any way concerned with the organisation or management of the gaming.

(8)For the purposes of sub-paragraph (7)(b) above the cash and gaming chips taken to be under the control of a person who is the provider of any premises or is concerned with the organisation or management of gaming on any premises shall include all cash and gaming chips in play or left on a gaming table on those premises.

Distress and poindingU.K.

13[F1(1)Sections 28 and 29 of the Betting and Gaming Duties Act 1981 (recovery of duty) shall have effect as follows so as to apply in relation to gaming duty as they applied in relation to the duty on gaming licences—U.K.

(a)in subsection (1) of each section, for “or 14 above or of Schedule 2 to this Act” there shall be substituted “ above or sections 10 to 15 of, and Schedule 1 to, the Finance Act 1997 ”; and

(b)in subsections (2) and (3) of each section, for the words “the duty on a gaming licence” there shall be substituted—

(i)in the first place where they occur in subsection (2), the words “ the gaming duty ”; and

(ii)in the other places where they occur, the words “ gaming duty ”].

(2)Sub-paragraph (1) above shall cease to have effect on such day as the Commissioners may by order made by statutory instrument appoint, and different days may be appointed under this sub-paragraph for different purposes.

Disclosure of informationU.K.

14(1)No obligation as to secrecy or other restriction on the disclosure of information imposed by statute or otherwise shall prevent—U.K.

(a)the Commissioners or an authorised officer of the Commissioners from disclosing to the Gaming Board for Great Britain or to an authorised officer of that Board, or

(b)that Board or an authorised officer of that Board from disclosing to the Commissioners or an authorised officer of the Commissioners,

information for the purpose of assisting the Commissioners in the carrying out of their functions with respect to gaming duty or, as the case may be, that Board in the carrying out of that Board’s functions under the M10Gaming Act 1968.

(2)Information obtained by virtue of a disclosure authorised by this paragraph shall not be disclosed except—

(a)to the Commissioners or the Gaming Board for Great Britain or to an authorised officer of the Commissioners or that Board; or

(b)for the purposes of any proceedings connected with a matter in relation to which the Commissioners or that Board carry out the functions mentioned in sub-paragraph (1) above.

Evidence by certificateU.K.

15U.K.Section 29A of the M11Betting and Gaming Duties Act 1981 (evidence by certificate) shall apply for the purposes of sections 10 to 15 of this Act and this Schedule as it applies for the purposes of that Act.

Protection of officersU.K.

16U.K.Section 31 of the Betting and Gaming Duties Act 1981 (protection of officers) shall apply for the purposes of gaming duty as it applies for the purposes of general betting duty.

Section 13.

SCHEDULE 2U.K. Gaming duty: consequential and incidental amendments

Part IU.K. Amendments of the Customs and Excise Management Act 1979

IntroductoryU.K.

1U.K.The M12Customs and Excise Management Act 1979 shall be amended in accordance with the provisions of this Part of this Schedule.

Meaning of “revenue trade provisions” and “revenue trader”U.K.

2(1)This paragraph amends section 1(1) (interpretation).U.K.

(2)In the definition of “the revenue trade provisions of the customs and excise Acts”, after paragraph (d) there shall be inserted the following paragraph—

(3)In paragraph (a) of the definition of “revenue trader”, after sub-paragraph (ia) there shall be inserted the following sub-paragraphs—

(4)In sub-paragraph (ii) of that paragraph, for “or (ia)” there shall be substituted “ , (ia), (ib) or (ic) ”.

Amendments of Part IXAU.K.

3U.K.In section 118B (furnishing of information etc. by revenue traders)—

(a)in subsection (1)(a), after sub-paragraph (ii) there shall be inserted “or

(iii)any transaction or activity effected or taking place in the course or furtherance of a business,”;

(b)in subsection (1)(b), at the end there shall be inserted “ or to the transaction or activity ”; and

(c)in subsection (3), after “any business” there shall be inserted “ , or to any transaction or activity effected or taking place in the course or furtherance of any business, ”.

4(1)This paragraph amends section 118C (powers of entry and search).U.K.

(2)After subsection (2) there shall be inserted the following subsections—

“(2A)Where an officer has reasonable cause to believe that any premises are premises where gaming to which section 10 of the Finance Act 1997 (gaming duty) applies is taking place, has taken place or is about to take place, he may at any reasonable time enter and inspect those premises and inspect any relevant materials found on them.

(2B)In subsection (2A) above “relevant materials” means—

(a)any accounts, records or other documents found on the premises in the custody or control of any person who is engaging, or whom the officer reasonably suspects of engaging—

(i)in any such gaming, or

(ii)in any activity by reason of which he is or may become liable to gaming duty,

and

(b)any equipment which is being, or which the officer reasonably suspects of having been or of being intended to be, used on the premises for or in connection with any such gaming.”

(3)In subsection (3) (justice’s warrant for entry), after paragraph (b) there shall be inserted “or

(c)that there is reasonable ground for suspecting—

(i)that gaming to which section 10 of the Finance Act 1997 applies is taking place, has taken place or is about to take place on any premises, or

(ii)that evidence of the commission of a gaming duty offence is to be found there,”.

(4)In subsection (4)(b) (powers on entry under a warrant), after “of a serious nature” there shall be inserted “ or in respect of a gaming duty offence ”.

(5)In subsection (5) (meaning of “fraud offence”), at the end there shall be inserted “ and “a gaming duty offence” means an offence under paragraph 12(2) of Schedule 1 to the Finance Act 1997 (offences in connection with gaming duty) ”.

Part IIU.K. Other amendments

Licences under the Gaming Act 1968U.K.

5(1)Schedule 2 to the M15Gaming Act 1968 (grant etc. of licences) shall be amended in accordance with the provisions of this paragraph.U.K.

(2)In paragraph 20(1) (grounds for refusing to grant or renew a licence), after paragraph (f) there shall be inserted the following paragraph—

“(g)that any gaming duty charged on the premises remains unpaid.”

(3)In paragraph 48(1) (cancellation of licence on conviction for second or subsequent offence), after “the enactments consolidated by that Act)” there shall be inserted “ or of an offence under paragraph 12 of Schedule 1 to the Finance Act 1997 ”.

(4)In paragraph 60(c) (transfer of licence may be refused if duty unpaid), after “bingo duty” there shall be inserted “ or gaming duty ”.

Preferential debts on insolvencyU.K.

F26U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Assessments to dutyU.K.

7U.K.In section 12(2)(c) of the M16Finance Act 1994 (duty may be assessed upon the occurrence of certain defaults in connection with betting duties and bingo duty), after “under Schedule 1 or 3 to the M17Betting and Gaming Duties Act 1981” there shall be inserted “ or Schedule 1 to the Finance Act 1997 ”.

Section 18.

SCHEDULE 3U.K. Vehicle excise duty: exempt vehicles

InterpretationU.K.

1U.K.In this Schedule “the 1994 Act” means the M18Vehicle Excise and Registration Act 1994.

Registration of vehicle on issue of nil licenceU.K.

2U.K.In section 21 of the 1994 Act (registration of vehicles), for subsection (1) there shall be substituted the following subsection—

“(1)Subject to subsection (3), on the issue by the Secretary of State for a vehicle which is not registered under this section of either—

(a)a vehicle licence, or

(b)a nil licence,

the Secretary of State shall register the vehicle in such manner as he thinks fit without any further application by the person to whom the licence is issued.”

Return of nil licenceU.K.

3U.K.In section 22 of the 1994 Act (registration regulations), after subsection (3) there shall be inserted the following subsection—

“(4)Regulations made by the Secretary of State may make provision for the return of any nil licence to the Secretary of State in such circumstances as may be prescribed by the regulations.”

Offence of not exhibiting nil licenceU.K.

4(1)In section 33 of the 1994 Act (not exhibiting licence), after subsection (1) there shall be inserted the following subsection—U.K.

“(1A)A person is guilty of an offence if—

(a)he uses, or keeps, on a public road an exempt vehicle,

(b)that vehicle is one in respect of which regulations under this Act require a nil licence to be in force, and

(c)there is not fixed to and exhibited on the vehicle in the manner prescribed by regulations made by the Secretary of State a nil licence for that vehicle which is for the time being in force.”

(2)In subsection (2) of that section, after “(1)” there shall be inserted “ or (1A) ”.

(3)For subsection (3) of that section there shall be substituted the following subsection—

“(3)Subsections (1) and (1A)—

(a)have effect subject to the provisions of regulations made by the Secretary of State, and

(b)are without prejudice to sections 29 and 43A.”

(4)In subsection (4) of that section, for “in respect of which excise duty is chargeable” there shall be substituted “ which is kept or used on a public road ”.

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

“(5)The reference to a licence in subsection (4) includes a reference to a nil licence.”

Offence of failing to have nil licence for exempt vehicleU.K.

5U.K.Immediately before section 44 of the 1994 Act there shall be inserted the following section—

“43A Failure to have nil licence for exempt vehicle.

(1)A person is guilty of an offence if—

(a)he uses, or keeps, on a public road an exempt vehicle,

(b)that vehicle is one in respect of which regulations under this Act require a nil licence to be in force, and

(c)a nil licence is not for the time being in force in respect of the vehicle.

(2)A person guilty of an offence under subsection (1) is liable on summary conviction to a fine not exceeding level 2 on the standard scale.

(3)Subsection (1) has effect subject to the provisions of regulations made by the Secretary of State.

(4)The Secretary of State may, if he thinks fit, compound any proceedings for an offence under this section.”

Offence of forging or fraudulently using etc. nil licenceU.K.

6U.K.In subsection (2) of section 44 of the 1994 Act (forgery and fraud), for paragraph (c) there shall be substituted the following paragraph—

“(c)a nil licence,”.

Supplemental provisionsU.K.

7(1)In section 46 of the 1994 Act (duty to give information)—U.K.

(a)in subsection (1), for “or 37” there shall be substituted “ , 37 or 43A ”;

(b)in subsections (2) and (3), after “section 29” there shall be inserted “ or 43A ”.

(2)In subsection (1) of section 51 of that Act (admissions), for “or 34” there shall be substituted “ , 34 or 43A ”.

(3)In subsection (1) of section 62 of that Act (other definitions), after the definition of “motor trader” there shall be inserted the following definition—

• ““nil licence” means a document which is in the form of a vehicle licence and is issued by the Secretary of State in pursuance of regulations under this Act in respect of a vehicle which is an exempt vehicle,”.

(4)In paragraph 20 of Schedule 2 to that Act (exempt vehicles), sub-paragraph (4) shall cease to have effect.

Further amendmentsU.K.

8(1)In Schedule 3 to the M19Road Traffic Offenders Act 1988 (fixed penalty offences), in column 2 of the entry relating to section 33 of the 1994 Act, for “licence” there shall be substituted “ vehicle licence, trade licence or nil licence ”.U.K.

(2)In Article 198 of the M20Road Traffic (Northern Ireland) Order 1981 (offences punishable without prosecution), in paragraph (1)(f) for “licence” there shall be substituted “ vehicle licence, trade licence or nil licence ”.

CommencementU.K.

9U.K.This Schedule shall come into force on such day as the Secretary of State may by order made by statutory instrument appoint; and different days may be appointed under this paragraph for different purposes.

Section 22.

SCHEDULE 4U.K. Insurance premium tax: the higher rate

Schedule to be inserted into the Finance Act 1994U.K.

Section 51A.

“SCHEDULE 6AU.K. Premiums liable to tax at the higher rate

Part IU.K. Interpretation

1(1)In this Schedule—

• “insurance-related service” means any service which is related to, or connected with, insurance;

• “supply” includes all forms of supply; and “supplier” shall be construed accordingly.

(2)For the purposes of this Schedule, any question whether a person is connected with another shall be determined in accordance with section 839 of the Taxes Act 1988.

Part IIU.K. Descriptions of premium

Insurance relating to motor cars or motor cyclesU.K.

2(1)A premium under a taxable insurance contract relating to a motor car or motor cycle falls within this paragraph if—

(a)the contract is arranged through a person falling within sub-paragraph (2) below, or

(b)the insurer under the contract is a person falling within that sub-paragraph,

unless the insurance is provided to the insured free of charge.

(2)A person falls within this sub-paragraph if—

(a)he is a supplier of motor cars or motor cycles;

(b)he is connected with a supplier of motor cars or motor cycles; or

(c)he pays—

(i)the whole or any part of the premium received under the taxable insurance contract, or

(ii)a fee connected with the arranging of that contract,

to a supplier of motor cars or motor cycles or to a person who is connected with a supplier of motor cars or motor cycles.

(3)Where a taxable insurance contract relating to a motor car or motor cycle is arranged through a person who is connected with a supplier of motor cars or motor cycles, the premium does not fall within this paragraph by virtue only of sub-paragraph (2)(b) above except to the extent that the premium is attributable to cover for a risk which relates to a motor car or motor cycle supplied by a supplier of motor cars or motor cycles with whom that person is connected.

(4)Where the insurer under a taxable insurance contract relating to a motor car or motor cycle is connected with a supplier of motor cars or motor cycles, the premium does not fall within this paragraph by virtue only of sub-paragraph (2)(b) above except to the extent that the premium is attributable to cover for a risk which relates to a motor car or motor cycle supplied by a supplier of motor cars or motor cycles with whom the insurer is connected.

(5)For the purposes of this paragraph, the cases where insurance is provided to the insured free of charge are those cases where no charge (whether by way of premium or otherwise) is made—

(a)in respect of the taxable insurance contract, or

(b)at or about the time when the taxable insurance contract is made and in connection with that contract, in respect of any insurance-related service,

by any person falling within sub-paragraph (2) above to any person who is or becomes the insured (or one of the insured) under the contract or to any person who acts, otherwise than in the course of a business, for or on behalf of such a person.

(6)In this paragraph—

• “motor car” and “motor cycle” have the meaning given—

  (a)

  by section 185(1) of the M21Road Traffic Act 1988; or

  (b)

  in Northern Ireland, by Article 3(1) of the M22Road Traffic (Northern Ireland) Order 1995;

• “supplier” does not include an insurer who supplies a car or motor cycle as a means of discharging liabilities arising by reason of a claim under an insurance contract.

Insurance relating to domestic appliances etc.U.K.

3(1)A premium under a taxable insurance contract relating to relevant goods falls within this paragraph if—

(a)the contract is arranged through a person falling within sub-paragraph (2) below, or

(b)the insurer under the contract is a person falling within that sub-paragraph,

unless the insurance is provided to the insured free of charge.

(2)A person falls within this sub-paragraph if—

(a)he is a supplier of relevant goods;

(b)he is connected with a supplier of relevant goods; or

(c)he pays—

(i)the whole or any part of the premium received under the taxable insurance contract, or

(ii)a fee connected with the arranging of that contract,

to a supplier of relevant goods or to a person who is connected with a supplier of relevant goods.

(3)Where a taxable insurance contract relating to relevant goods is arranged through a person who is connected with a supplier of relevant goods, the premium does not fall within this paragraph by virtue only of sub-paragraph (2)(b) above except to the extent that the premium is attributable to cover for a risk which relates to relevant goods supplied by a supplier of relevant goods with whom that person is connected.

(4)Where the insurer under a taxable insurance contract relating to relevant goods is connected with a supplier of relevant goods, the premium does not fall within this paragraph by virtue only of sub-paragraph (2)(b) above except to the extent that the premium is attributable to cover for a risk which relates to relevant goods supplied by a supplier of relevant goods with whom the insurer is connected.

(5)For the purposes of this paragraph, the cases where insurance is provided to the insured free of charge are those cases where no charge (whether by way of premium or otherwise) is made—

(a)in respect of the taxable insurance contract, or

(b)at or about the time when the taxable insurance contract is made and in connection with that contract, in respect of any insurance-related service,

by any person falling within sub-paragraph (2) above to any person who is or becomes the insured (or one of the insured) under the contract or to any person who acts, otherwise than in the course of a business, for or on behalf of such a person.

(6)In this paragraph—

• “relevant goods” means any electrical or mechanical appliance of a kind—

  (a)

  which is ordinarily used in or about the home; or

  (b)

  which is ordinarily owned by private individuals and used by them for the purposes of leisure, amusement or entertainment;

• “supplier” does not include an insurer who supplies relevant goods as a means of discharging liabilities arising by reason of a claim under an insurance contract.

(7)In sub-paragraph (6) above—

• “appliance” includes any device, equipment or apparatus;

• “the home” includes any private garden and any private garage or private workshop appurtenant to a dwelling.

Travel insuranceU.K.

4(1)A premium under a taxable insurance contract relating to travel risks falls within this paragraph if—

(a)the contract is arranged through a person falling within sub-paragraph (2) below, or

(b)the insurer under the contract is a person falling within that sub-paragraph,

unless the insurance is provided to the insured free of charge.

(2)A person falls within this sub-paragraph if—

(a)he is a tour operator or travel agent;

(b)he is connected with a tour operator or travel agent; or

(c)he pays—

(i)the whole or any part of the premium received under the contract, or

(ii)a fee connected with the arranging of the contract,

to a tour operator or travel agent or to a person who is connected with a tour operator or travel agent.

(3)Where a taxable insurance contract relating to travel risks is arranged through a person who is connected with a tour operator or travel agent, the premium does not fall within this paragraph by virtue only of sub-paragraph (2)(b) above except to the extent that the premium is attributable to cover for a risk which relates to services supplied by a tour operator or travel agent with whom that person is connected.

(4)Where the insurer under a taxable insurance contract relating to travel risks is connected with a tour operator or travel agent, the premium does not fall within this paragraph by virtue only of sub-paragraph (2)(b) above except to the extent that the premium is attributable to cover for a risk which relates to services supplied by a tour operator or travel agent with whom the insurer is connected.

(5)For the purposes of sub-paragraphs (3) and (4) above, a travel agent shall be treated as supplying any services whose provision he secures or arranges.

(6)For the purposes of this paragraph, the cases where insurance is provided to the insured free of charge are those cases where no charge (whether by way of premium or otherwise) is made—

(a)in respect of the taxable insurance contract, or

(b)at or about the time when the taxable insurance contract is made and in connection with that contract, in respect of any insurance-related service,

by any person falling within sub-paragraph (2) above to any person who is or becomes the insured (or one of the insured) under the contract or to any person who acts, otherwise than in the course of a business, for or on behalf of such a person.

(7)In this paragraph—

• “tour operator” includes any person who carries on a business which consists of or includes the provision, or the securing of the provision, of—

  (a)

  services for the transport of travellers; or

  (b)

  accommodation for travellers;

• “travel agent” includes any person who carries on a business which consists of or includes the making of arrangements, whether directly or indirectly, with a tour operator for the transport or accommodation of travellers;

• “travel risks” means—

  (a)

  risks associated with, or related to, travel or intended travel; or

  (b)

  risks to which a person travelling may be exposed at any place at which he may be in the course of his travel.”

Section 50.

SCHEDULE 5U.K. Indirect taxes: overpayments etc

Part IU.K. Unjust enrichment

Application of Part IU.K.

1(1)This Part of this Schedule has effect for the purposes of the following provisions (which make it a defence to a claim for repayment that the repayment would unjustly enrich the claimant), namely—U.K.

(a)section 137A(3) of the M23Customs and Excise Management Act 1979 (excise duties);

(b)paragraph 8(3) of Schedule 7 to the M24Finance Act 1994 (insurance premium tax); and

(c)paragraph 14(3) of Schedule 5 to the M25Finance Act 1996 (landfill tax).

(2)Those provisions are referred to in this Part of this Schedule as unjust enrichment provisions.

(3)In this Part of this Schedule—

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

• “relevant repayment provision” means—

  (a)

  section 137A of the Customs and Excise Management Act 1979 (recovery of overpaid excise duty);

  (b)

  paragraph 8 of Schedule 7 to the Finance Act 1994 (recovery of overpaid insurance premium tax); or

  (c)

  paragraph 14 of Schedule 5 to the Finance Act 1996 (recovery of overpaid landfill tax);

• “relevant tax” means any duty of excise, insurance premium tax or landfill tax; and

• “subordinate legislation” has the same meaning as in the M26Interpretation Act 1978.

Disregard of business lossesU.K.

2(1)This paragraph applies where—U.K.

(a)there is an amount paid by way of relevant tax which (apart from an unjust enrichment provision) would fall to be repaid under a relevant repayment provision to any person (“the taxpayer”), and

(b)the whole or a part of the cost of the payment of that amount to the Commissioners has, for practical purposes, been borne by a person other than the taxpayer.

(2)Where, in a case to which this paragraph applies, loss or damage has been or may be incurred by the taxpayer as a result of mistaken assumptions made in his case about the operation of any provisions relating to a relevant tax, that loss or damage shall be disregarded, except to the extent of the quantified amount, in the making of any determination—

(a)of whether or to what extent the repayment of an amount to the taxpayer would enrich him; or

(b)of whether or to what extent any enrichment of the taxpayer would be unjust.

(3)In sub-paragraph (2) above “the quantified amount” means the amount (if any) which is shown by the taxpayer to constitute the amount that would appropriately compensate him for loss or damage shown by him to have resulted, for any business carried on by him, from the making of the mistaken assumptions.

(4)The reference in sub-paragraph (2) above to provisions relating to a relevant tax is a reference to any provisions of—

(a)any enactment, subordinate legislation or Community legislation (whether or not still in force) which relates to that tax or to any matter connected with it; or

(b)any notice published by the Commissioners under or for the purposes of any such enactment or subordinate legislation.

(5)This paragraph has effect for the purposes of making any repayment on or after the day on which this Act is passed, even if the claim for that repayment was made before that day.

Reimbursement arrangementsU.K.

3(1)The Commissioners may by regulations make provision for reimbursement arrangements made by any person to be disregarded for the purposes of any or all of the unjust enrichment provisions except where the arrangements—U.K.

(a)contain such provision as may be required by the regulations; and

(b)are supported by such undertakings to comply with the provisions of the arrangements as may be required by the regulations to be given to the Commissioners.

(2)In this paragraph “reimbursement arrangements” means any arrangements for the purposes of a claim under a relevant repayment provision which—

(a)are made by any person for the purpose of securing that he is not unjustly enriched by the repayment of any amount in pursuance of the claim; and

(b)provide for the reimbursement of persons who have for practical purposes borne the whole or any part of the cost of the original payment of that amount to the Commissioners.

(3)Without prejudice to the generality of sub-paragraph (1) above, the provision that may be required by regulations under this paragraph to be contained in reimbursement arrangements includes—

(a)provision requiring a reimbursement for which the arrangements provide to be made within such period after the repayment to which it relates as may be specified in the regulations;

(b)provision for the repayment of amounts to the Commissioners where those amounts are not reimbursed in accordance with the arrangements;

(c)provision requiring interest paid by the Commissioners on any amount repaid by them to be treated in the same way as that amount for the purposes of any requirement under the arrangements to make reimbursement or to repay the Commissioners;

(d)provision requiring such records relating to the carrying out of the arrangements as may be described in the regulations to be kept and produced to the Commissioners, or to an officer of theirs.

(4)Regulations under this paragraph may impose obligations on such persons as may be specified in the regulations—

(a)to make the repayments to the Commissioners that they are required to make in pursuance of any provisions contained in any reimbursement arrangements by virtue of sub-paragraph (3)(b) or (c) above;

(b)to comply with any requirements contained in any such arrangements by virtue of sub-paragraph (3)(d) above.

(5)Regulations under this paragraph may make provision for the form and manner in which, and the times at which, undertakings are to be given to the Commissioners in accordance with the regulations; and any such provision may allow for those matters to be determined by the Commissioners in accordance with the regulations.

(6)Regulations under this paragraph may—

(a)contain any such incidental, supplementary, consequential or transitional provision as appears to the Commissioners to be necessary or expedient; and

(b)make different provision for different circumstances.

(7)Regulations under this paragraph may have effect (irrespective of when the claim for repayment was made) for the purposes of the making of any repayment by the Commissioners after the time when the regulations are made; and, accordingly, such regulations may apply to arrangements made before that time.

(8)Regulations under this paragraph shall be made by statutory instrument subject to annulment in pursuance of a resolution of the House of Commons.

Contravention of requirement to repay CommissionersU.K.

4(1)Where any obligation is imposed by regulations made by virtue of paragraph 3(4) above, a contravention or failure to comply with that obligation shall, to the extent that it relates to amounts repaid under section 137A of the M27Customs and Excise Management Act 1979, attract a penalty under section 9 of the Finance Act 1994 (penalties in connection with excise duties).U.K.

(2)For the purposes of Schedule 7 to the M28Finance Act 1994 (insurance premium tax), a contravention or failure to comply with an obligation imposed by regulations made by virtue of paragraph 3(4) above shall be deemed, to the extent that it relates to amounts repaid under paragraph 8 of that Schedule (recovery of overpaid insurance premium tax), to be a failure to comply with a requirement falling within paragraph 17(1)(c) of that Schedule (breach of regulations).

(3)Paragraph 23 of Schedule 5 to the M29Finance Act 1996 (power to provide for penalty) shall have effect as if an obligation imposed by regulations made by virtue of paragraph 3(4) above were, to the extent that it relates to amounts repaid under paragraph 14 of that Schedule (recovery of overpaid landfill tax), a requirement imposed by regulations under Part III of that Act; and the provisions of that Schedule in relation to penalties under Part V of that Schedule shall have effect accordingly.

Part IIU.K. Time limits

RepaymentsU.K.

5(1)For subsection (4) of section 137A of the M30Customs and Excise Management Act 1979 (time limit on recovery of overpaid excise duty) there shall be substituted the following subsection—U.K.

“(4)The Commissioners shall not be liable, on a claim made under this section, to repay any amount paid to them more than three years before the making of the claim.”

(2)For sub-paragraphs (4) and (5) of paragraph 8 of Schedule 7 to the M31Finance Act 1994 (time limit on recovery of overpaid insurance premium tax) there shall be substituted the following sub-paragraph—

“(4)The Commissioners shall not be liable, on a claim made under this paragraph, to repay any amount paid to them more than three years before the making of the claim.”

(3)For sub-paragraph (4) of paragraph 14 of Schedule 5 to the M32Finance Act 1996 (time limit on recovery of overpaid landfill tax) there shall be substituted the following sub-paragraph—

“(4)The Commissioners shall not be liable, on a claim made under this paragraph, to repay any amount paid to them more than three years before the making of the claim.”

AssessmentsU.K.

6(1)In each of the enactments specified in sub-paragraph (2) below (which provide for the time limits applying to the making of assessments), for the words “six years”, wherever they occur, there shall be substituted the words “ three years ”.U.K.

(2)Those enactments are—

(a)section 12(4)(a) and (5) of the Finance Act 1994 (excise duties);

(b)paragraph 26(1) and (4) of Schedule 7 to that Act (insurance premium tax); and

(c)paragraph 33(1) and (4) of Schedule 5 to the M33Finance Act 1996 (landfill tax).

Part IIIU.K. Interest

Interest on overpaid air passenger dutyU.K.

7(1)Paragraph 9 of Schedule 6 to the Finance Act 1994 (interest payable by the Commissioners in connection with air passenger duty) shall have effect, and be deemed always to have had effect, with the amendments for which this paragraph provides.U.K.

(2)After sub-paragraph (1) there shall be inserted the following sub-paragraph—

“(1A)In sub-paragraph (1) above the reference to an amount which the Commissioners are liable to repay in consequence of the making of a payment that was not due is a reference to only so much of that amount as is the subject of a claim that the Commissioners are required to satisfy or have satisfied.”

(3)For sub-paragraph (6) (claims for interest to be made within six years of discovery of error) there shall be substituted the following sub-paragraph—

“(6)A claim under this paragraph shall not be made more than three years after the end of the applicable period to which it relates.”

(4)For sub-paragraph (7) there shall be substituted the following sub-paragraph—

“(7)Any reference in this paragraph to the authorisation by the Commissioners of the payment of any amount includes a reference to the discharge by way of set-off of the Commissioners’ liability to pay that amount.”

8(1)In sub-paragraph (2) of that paragraph (applicable period), the words after paragraph (b) shall be omitted; and the following sub-paragraphs shall be substituted for sub-paragraphs (3) and (4)—U.K.

“(2A)In determining the applicable period for the purposes of this paragraph there shall be left out of account any period by which the Commissioners’ authorisation of the payment of interest is delayed by the conduct of the person who claims the interest.

(2B)The reference in sub-paragraph (2A) above to a period by which the Commissioners’ authorisation of the payment of interest is delayed by the conduct of the person who claims it includes, in particular, any period which is referable to—

(a)any unreasonable delay in the making of the claim for interest or in the making of any claim for the repayment of the amount on which interest is claimed;

(b)any failure by that person or a person acting on his behalf or under his influence to provide the Commissioners—

(i)at or before the time of the making of a claim, or

(ii)subsequently in response to a request for information by the Commissioners,

with all the information required by them to enable the existence and amount of the claimant’s entitlement to a repayment, and to interest on the amount of that repayment, to be determined; and

(c)the making, as part of or in association with either—

(i)the claim for interest, or

(ii)any claim for the payment or repayment of the amount on which interest is claimed,

of a claim to anything to which the claimant was not entitled.

(3)In determining for the purposes of sub-paragraph (2B) above whether any period of delay is referable to a failure by any person to provide information in response to a request by the Commissioners, there shall be taken to be so referable, except so far as may be prescribed, any period which—

(a)begins with the date on which the Commissioners require that person to provide information which they reasonably consider relevant to the matter to be determined; and

(b)ends with the earliest date on which it would be reasonable for the Commissioners to conclude—

(i)that they have received a complete answer to their request for information;

(ii)that they have received all that they need in answer to that request; or

(iii)that it is unnecessary for them to be provided with any information in answer to that request.”

(2)Sub-paragraph (1) above shall have effect for the purposes of determining whether any period beginning on or after the day on which this Act is passed is left out of account.

Interest on overpaid insurance premium taxU.K.

9(1)Paragraph 22 of Schedule 7 to the M34Finance Act 1994 (interest payable by the Commissioners in connection with insurance premium tax) shall have effect, and be deemed always to have had effect, with the amendments for which this paragraph provides.U.K.

(2)After sub-paragraph (1) there shall be inserted the following sub-paragraph—

“(1A)In sub-paragraph (1) above—

(a)the reference in paragraph (a) to an amount which the Commissioners are liable to repay in consequence of the making of a payment that was not due is a reference to only so much of that amount as is the subject of a claim that the Commissioners are required to satisfy or have satisfied; and

(b)the amounts referred to in paragraph (c) do not include any amount payable under this paragraph.”

(3)For sub-paragraph (9) of that paragraph (claims for interest to be made within six years of discovery of error) there shall be substituted the following sub-paragraph—

“(9)A claim under this paragraph shall not be made more than three years after the end of the applicable period to which it relates.”

(4)For sub-paragraph (10) there shall be substituted the following sub-paragraph—

“(10)References in this paragraph to the authorisation by the Commissioners of the payment of any amount include references to the discharge by way of set-off of the Commissioners’ liability to pay that amount.”

10(1)For sub-paragraphs (5) to (7) of that paragraph (periods left out of account in computing periods for which the Commissioners are liable to interest) there shall be substituted the following sub-paragraphs—U.K.

“(5)In determining the applicable period for the purposes of this paragraph there shall be left out of account any period by which the Commissioners’ authorisation of the payment of interest is delayed by the conduct of the person who claims the interest.

(5A)The reference in sub-paragraph (5) above to a period by which the Commissioners’ authorisation of the payment of interest is delayed by the conduct of the person who claims it includes, in particular, any period which is referable to—

(a)any unreasonable delay in the making of the claim for interest or in the making of any claim for the payment or repayment of the amount on which interest is claimed;

(b)any failure by that person or a person acting on his behalf or under his influence to provide the Commissioners—

(i)at or before the time of the making of a claim, or

(ii)subsequently in response to a request for information by the Commissioners,

with all the information required by them to enable the existence and amount of the claimant’s entitlement to a payment or repayment, and to interest on that payment or repayment, to be determined; and

(c)the making, as part of or in association with either—

(i)the claim for interest, or

(ii)any claim for the payment or repayment of the amount on which interest is claimed,

of a claim to anything to which the claimant was not entitled.

(6)In determining for the purposes of sub-paragraph (5A) above whether any period of delay is referable to a failure by any person to provide information in response to a request by the Commissioners, there shall be taken to be so referable, except so far as may be provided for by regulations, any period which—

(a)begins with the date on which the Commissioners require that person to provide information which they reasonably consider relevant to the matter to be determined; and

(b)ends with the earliest date on which it would be reasonable for the Commissioners to conclude—

(i)that they have received a complete answer to their request for information;

(ii)that they have received all that they need in answer to that request; or

(iii)that it is unnecessary for them to be provided with any information in answer to that request.”

(2)Sub-paragraph (1) above shall have effect for the purposes of determining whether any period beginning on or after the day on which this Act is passed is left out of account.

Interest on overpaid landfill taxU.K.

11(1)Paragraph 29 of Schedule 5 to the M35Finance Act 1996 (interest payable by the Commissioners in connection with landfill tax) shall have effect, and be deemed always to have had effect, with the amendments for which this paragraph provides.U.K.

(2)After sub-paragraph (1) there shall be inserted the following sub-paragraph—

“(1A)In sub-paragraph (1) above—

(a)the reference in paragraph (a) to an amount which the Commissioners are liable to repay in consequence of the making of a payment that was not due is a reference to only so much of that amount as is the subject of a claim that the Commissioners are required to satisfy or have satisfied; and

(b)the amounts referred to in paragraph (c) do not include any amount payable under this paragraph.”

(3)For sub-paragraph (8) (claims for interest to be made within six years of discovery of error) there shall be substituted the following sub-paragraph—

“(8)A claim under this paragraph shall not be made more than three years after the end of the applicable period to which it relates.”

(4)For sub-paragraph (9) there shall be substituted the following sub-paragraph—

“(9)References in this paragraph—

(a)to receiving payment of any amount from the Commissioners, or

(b)to the authorisation by the Commissioners of the payment of any amount,

include references to the discharge by way of set-off (whether in accordance with regulations under paragraph 42 or 43 below or otherwise) of the Commissioners’ liability to pay that amount.”

12(1)For sub-paragraphs (4) to (6) of that paragraph (periods left out of account in computing periods for which the Commissioners are liable to interest) there shall be substituted the following sub-paragraphs—U.K.

“(4)In determining the applicable period for the purposes of this paragraph there shall be left out of account any period by which the Commissioners’ authorisation of the payment of interest is delayed by the conduct of the person who claims the interest.

(4A)The reference in sub-paragraph (4) above to a period by which the Commissioners’ authorisation of the payment of interest is delayed by the conduct of the person who claims it includes, in particular, any period which is referable to—

(a)any unreasonable delay in the making of the claim for interest or in the making of any claim for the payment or repayment of the amount on which interest is claimed;

(b)any failure by that person or a person acting on his behalf or under his influence to provide the Commissioners—

(i)at or before the time of the making of a claim, or

(ii)subsequently in response to a request for information by the Commissioners,

with all the information required by them to enable the existence and amount of the claimant’s entitlement to a payment or repayment, and to interest on that payment or repayment, to be determined; and

(c)the making, as part of or in association with either—

(i)the claim for interest, or

(ii)any claim for the payment or repayment of the amount on which interest is claimed,

of a claim to anything to which the claimant was not entitled.

(5)In determining for the purposes of sub-paragraph (4A) above whether any period of delay is referable to a failure by any person to provide information in response to a request by the Commissioners, there shall be taken to be so referable, except so far as may be provided for by regulations, any period which—

(a)begins with the date on which the Commissioners require that person to provide information which they reasonably consider relevant to the matter to be determined; and

(b)ends with the earliest date on which it would be reasonable for the Commissioners to conclude—

(i)that they have received a complete answer to their request for information;

(ii)that they have received all that they need in answer to that request; or

(iii)that it is unnecessary for them to be provided with any information in answer to that request.”

(2)Sub-paragraph (1) above shall have effect for the purposes of determining whether any period beginning on or after the day on which this Act is passed is left out of account.

Part IVU.K. Set-off involving landfill tax

13(1)In paragraph 42 of Schedule 5 to the M36Finance Act 1996 (set-off of amounts), after sub-paragraph (4) there shall be inserted the following sub-paragraph—U.K.

“(4A)The regulations may provide for any limitation on the time within which the Commissioners are entitled to take steps for recovering any amount due to them in respect of landfill tax to be disregarded, in such cases as may be described in the regulations, in determining whether any person is under such a duty to pay as is mentioned in sub-paragraph (1)(a) above.”

(2)In paragraph 43 of that Schedule (set-off of amounts), after sub-paragraph (4) there shall be inserted the following sub-paragraph—

“(4A)The regulations may provide for any limitation on the time within which the Commissioners are entitled to take steps for recovering any amount due to them in respect of any of the taxes under their care and management to be disregarded, in such cases as may be described in the regulations, in determining whether any person is under such a duty to pay as is mentioned in sub-paragraph (1)(a) above.”

Part VU.K. Recovery of excess payments by the Commissioners

Assessment for excessive repaymentU.K.

14(1)Where—U.K.

(a)any amount has been paid at any time to any person by way of a repayment under a relevant repayment provision, and

(b)the amount paid exceeded the amount which the Commissioners were liable at that time to repay to that person,

the Commissioners may, to the best of their judgement, assess the excess paid to that person and notify it to him.

(2)Where any person is liable to pay any amount to the Commissioners in pursuance of an obligation imposed by virtue of paragraph 3(4)(a) above, the Commissioners may, to the best of their judgement, assess the amount due from that person and notify it to him.

(3)In this paragraph “relevant repayment provision” means—

(a)section 137A of the M37Customs and Excise Management Act 1979 (recovery of overpaid excise duty);

(b)paragraph 8 of Schedule 7 to the M38Finance Act 1994 (recovery of overpaid insurance premium tax); F3. . .

(c)paragraph 14 of Schedule 5 to the Finance Act 1996 (recovery of overpaid landfill tax) [F4or

(d)Part 1 of Schedule 3 to the Finance Act 2001 (payments made and rebates disallowed in error).]

Assessment for overpayments of interestU.K.

15(1)Where—U.K.

(a)any amount has been paid to any person by way of interest under a relevant interest provision, but

(b)that person was not entitled to that amount under that provision,

the Commissioners may, to the best of their judgement, assess the amount so paid to which that person was not entitled and notify it to him.

(2)In this paragraph “relevant interest provision” means—

F5(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b)paragraph 22 of Schedule 7 to that Act (interest payable by the Commissioners on overpayments etc. of insurance premium tax); F6. . .

(c)paragraph 29 of Schedule 5 to the M39Finance Act 1996 (interest payable by the Commissioners on overpayments etc. of landfill tax) [F7or.

(d)Part 2 of Schedule 3 to the Finance Act 2001 (interest).]

Assessments under paragraphs 14 and 15U.K.

16(1)An assessment under paragraph 14 or 15 above shall not be made more than two years after the time when evidence of facts sufficient in the opinion of the Commissioners to justify the making of the assessment comes to the knowledge of the Commissioners.U.K.

(2)Where an amount has been assessed and notified to any person under paragraph 14 or 15 above, it shall be recoverable (subject to any provision having effect in accordance with paragraph 19 below) as if it were relevant tax due from him.

(3)Sub-paragraph (2) above does not have effect if, or to the extent that, the assessment in question has been withdrawn or reduced.

Interest on amounts assessedU.K.

17(1)Where an assessment is made under paragraph 14 or 15 above, the whole of the amount assessed shall carry interest at the rate applicable under section 197 of the Finance Act 1996 from the date on which the assessment is notified until payment.U.K.

(2)Where any person is liable to interest under sub-paragraph (1) above the Commissioners may assess the amount due by way of interest and notify it to him.

(3)Without prejudice to the power to make assessments under this paragraph for later periods, the interest to which an assessment under this paragraph may relate shall be confined to interest for a period of no more than two years ending with the time when the assessment under this paragraph is made.

(4)Interest under this paragraph shall be paid without any deduction of income tax.

(5)A notice of assessment under this paragraph shall specify a date, being not later than the date of the notice, to which the amount of interest is calculated; and, if the interest continues to accrue after that date, a further assessment or assessments may be made under this paragraph in respect of amounts which so accrue.

(6)If, within such period as may be notified by the Commissioners to the person liable for interest under sub-paragraph (1) above, the amount referred to in that sub-paragraph is paid, it shall be treated for the purposes of that sub-paragraph as paid on the date specified as mentioned in sub-paragraph (5) above.

(7)Where an amount has been assessed and notified to any person under this paragraph it shall be recoverable as if it were relevant tax due from him.

(8)Sub-paragraph (7) above does not have effect if, or to the extent that, the assessment in question has been withdrawn or reduced.

Supplementary assessmentsU.K.

18U.K.If it appears to the Commissioners that the amount which ought to have been assessed in an assessment under paragraph 14, 15 or 17 above exceeds the amount which was so assessed, then—

(a)under the same paragraph as that assessment was made, and

(b)on or before the last day on which that assessment could have been made,

the Commissioners may make a supplementary assessment of the amount of the excess and shall notify the person concerned accordingly.

Review of decisions and appealsU.K.

19(1)Sections 14 to 16 of the M40Finance Act 1994 (review and appeals) shall have effect in relation to any decision which—U.K.

(a)is contained in an assessment under paragraph 14, 15 or 17 above,

(b)is a decision about whether any amount is due to the Commissioners or about how much is due, and

(c)is made in a case in which the relevant repayment provision is section 137A of the M41Customs and Excise Management Act 1979 or [F8Part 1 of Schedule 3 to the Finance Act 2001 or the relevant interest provision is Part 2 of that Schedule],

as if that decision were such a decision as is mentioned in section 14(1)(b) of that Act of 1994.

(2)Sections 59 and 60 of that Act of 1994 (review and appeal in the case of insurance premium tax) shall have effect in relation to any decision which—

(a)is contained in an assessment under paragraph 14, 15 or 17 above,

(b)is a decision about whether any amount is due to the Commissioners or about how much is due, and

(c)is made in a case in which the relevant repayment provision is paragraph 8 of Schedule 7 to that Act or the relevant interest provision is paragraph 22 of that Schedule,

as if that decision were a decision to which section 59 of that Act applies.

(3)Sections 54 to 56 of the M42Finance Act 1996 (review and appeal in the case of landfill tax) shall have effect in relation to any decision which—

(a)is contained in an assessment under paragraph 14, 15 or 17 above,

(b)is a decision about whether any amount is due to the Commissioners or about how much is due, and

(c)is made in a case in which the relevant repayment provision is paragraph 14 of Schedule 5 to that Act or the relevant interest provision is paragraph 29 of that Schedule,

as if that decision were a decision to which section 54 of that Act applies.

Interpretation of Part VU.K.

20(1)In this Part of this Schedule “the Commissioners” means the Commissioners of Customs and Excise.U.K.

(2)In this Part of this Schedule “relevant tax”, in relation to any assessment, means—

(a)a duty of excise if the assessment relates to—

(i)a repayment of an amount paid by way of such a duty,

(ii)an overpayment of interest under [F9Part 2 of Schedule 3 to the Finance Act 2001], or

(iii)interest on an amount specified in an assessment in relation to which the relevant tax is a duty of excise;

(b)insurance premium tax if the assessment relates to—

(i)a repayment of an amount paid by way of such tax,

(ii)an overpayment of interest under paragraph 22 of Schedule 7 to the Finance Act 1994, or

(iii)interest on an amount specified in an assessment in relation to which the relevant tax is insurance premium tax;

and

(c)landfill tax if the assessment relates to—

(i)a repayment of an amount paid by way of such tax,

(ii)an overpayment of interest under paragraph 29 of Schedule 5 to the M43Finance Act 1996, or

(iii)interest on an amount specified in an assessment in relation to which the relevant tax is landfill tax.

(3)For the purposes of this Part of this Schedule notification to a personal representative, trustee in bankruptcy, interim or permanent trustee, receiver, liquidator or person otherwise acting in a representative capacity in relation to another shall be treated as notification to the person in relation to whom he so acts.

Consequential amendmentU.K.

21U.K.In section 197(2) of the Finance Act 1996 (enactments for which interest rates are set under section 197), after paragraph (d) there shall be inserted “and

(e)paragraph 17 of Schedule 5 to the Finance Act 1997 (interest on amounts repayable in respect of overpayments by the Commissioners in connection with excise duties, insurance premium tax and landfill tax).”

Section 50.

SCHEDULE 6U.K. Assessments for excise duty purposes

Assessment of amounts payable to the CommissionersU.K.

1(1)After section 12 of the Finance Act 1994 there shall be inserted the following sections—U.K.

“12A Other assessments relating to excise duty matters.

(1)This subsection applies where any relevant excise duty relief other than an excepted relief—

(a)has been given but ought not to have been given, or

(b)would not have been given had the facts been known or been as they later turn out to be.

(2)Where subsection (1) above applies, the Commissioners may assess the amount of the relief given as being excise duty due from the liable person and notify him or his representative accordingly.

(3)Where an amount has been assessed as due from any person under—

(a)subsection (2) above,

(b)section 94 or 96 of the Management Act, or

(c)section 10, 13, 14, 23 or 24 of the M44Hydrocarbon Oil Duties Act 1979,

and notice has been given accordingly, that amount shall, subject to any appeal under section 16 below, be deemed to be an amount of excise duty due from that person and may be recovered accordingly, unless, or except to the extent that, the assessment has subsequently been withdrawn or reduced.

(4)No assessment under any of the provisions referred to in subsection (3) above, or under section 61 or 167 of the Management Act, shall be made at any time after whichever is the earlier of the following times, that is to say—

(a)subject to subsection (6) below, the end of the period of three years beginning with the relevant time; and

(b)the end of the period of one year beginning with the day on which evidence of facts, sufficient in the opinion of the Commissioners to justify the making of the assessment, comes to their knowledge.

(5)Subsection (4) above shall be without prejudice, where further evidence comes to the knowledge of the Commissioners at any time after the making the assessment concerned, to the making of a further assessment within the period applicable by virtue of that subsection in relation to that further assessment.

(6)Subsection (4) above shall have effect as if the reference in paragraph (a) to three years were a reference to twenty years in any case where the assessment has been postponed or otherwise affected by, or the power to make the assessment arises out of, conduct falling within subsection (5)(a) or (b) of section 12 above (construed in accordance with subsection (7) of that section).

12B Section 12A: supplementary provisions.

(1)For the purposes of section 12A above and this section, relevant excise duty relief has been given if (and only if)—

(a)an amount of excise duty which a person is liable to pay has been remitted or payment of an amount of excise duty which a person is liable to pay has been waived;

(b)an amount of excise duty has been repaid to a person;

(c)an amount by way of drawback of excise duty has been paid to a person;

(d)an allowance of excise duty in any amount has been made to a person;

(e)an amount by way of rebate has been allowed to a person;

(f)the liability of a person to repay an amount paid by way of drawback of excise duty has been waived;

(g)an amount has been paid to a person under section 20(3) of the Hydrocarbon Oil Duties Act 1979 (payments in respect of contaminated or accidentally mixed oil); or

(h)an amount of relief has been allowed to a person by virtue of section 20AA of that Act (power to allow reliefs), or in accordance with paragraph 10 of Schedule 3 to that Act (power to make regulations for the purpose of relieving from excise duty oil intended for exportation or shipment as stores);

and the amount of the relief is the amount mentioned in relation to the relief in this subsection.

(2)For the purposes of section 12A above the relevant time is—

(a)in the case of an assessment under section 61 of the Management Act, the time when the ship or aircraft in question returned to a place within the United Kingdom;

(b)in the case of an assessment under section 94 of that Act, the time at which the goods in question were warehoused;

(c)in the case of an assessment under that section as it has effect by virtue of section 95 of that Act, the time when the goods in question were lawfully taken from the warehouse;

(d)in the case of an assessment under section 96 of that Act, the time when the goods in question were moved by pipe-line or notified as goods to be moved by pipe-line;

(e)in the case of an assessment under section 167 of that Act—

(i)if the assessment relates to unpaid duty, the time when the duty became payable or, if later, the time when the document in question was delivered or the statement in question was made; and

(ii)if the assessment relates to an overpayment, the time when the overpayment was made;

(f)in the case of an assessment under section 10, 13, 14 or 23 of the M45Hydrocarbon Oil Duties Act 1979, the time of the action which gave rise to the power to assess;

(g)in the case of an assessment under section 24(4A) or (4B) of that Act, the time when the rebate was allowed or the oil was delivered without payment of duty (as the case may be);

(h)in the case of an assessment under section 12A(2) above, the time when the relevant excise duty relief in question was given.

(3)In section 12A above “the liable person” means—

(a)in the case of excise duty which has been remitted or repaid under section 130 of the Management Act on the basis that goods were lost or destroyed while in a warehouse, the proprietor of the goods or the occupier of the warehouse;

(b)in the case of a rebate which has been allowed on any oil under section 11 of the Hydrocarbon Oil Duties Act 1979, the person to whom the rebate was allowed or the occupier of any warehouse from which the oil was delivered for home use;

(c)in the case of a rebate allowed on any petrol under section 13A of that Act, the person to whom the rebate was allowed or the occupier of any warehouse from which the petrol was delivered for home use;

(d)in any other case, the person mentioned in subsection (1) above to whom the relief in question was given.

(4)In section 12A above—

• “excepted relief” means any relief which is given by the making of a repayment on a claim made under section 137A of the Management Act;

• “representative”, in relation to any person from whom the Commissioners assess an amount as being excise duty due, means his personal representative, trustee in bankruptcy or interim or permanent trustee, any receiver or liquidator appointed in relation to him or any of his property or any other person acting in a representative capacity in relation to him.”

(2)After section 14(1)(b) of that Act there shall be inserted the following paragraph—

“(ba)any decision by the Commissioners to assess any person to excise duty under section 12A(2) above, section 61, 94, 96 or 167 of the Management Act or section 10, 13, 14, 23 or 24 of the M46Hydrocarbon Oil Duties Act 1979, or as to the amount of duty to which a person is to be assessed under any of those provisions;”.

(3)In sections 12(8) and 13(7) of that Act (definition of “representative” for the purposes of sections 12 and 13), for “or trustee in bankruptcy,” there shall be substituted “ , trustee in bankruptcy or interim or permanent trustee, ”.

Assessments in cases of a deficiency in storesU.K.

2(1)After subsection (7) of section 61 of the M47Customs and Excise Management Act 1979 (duty payable where deficiency or excess deficiency discovered in goods on return of ship or aircraft to United Kingdom) there shall be inserted the following subsection—U.K.

“(7A)No amount of excise duty shall be payable under subsection (7) above unless the Commissioners have assessed that amount as being excise duty due from the master of the ship or the commander of the aircraft and notified him or his representative accordingly.”

(2)In subsection (8) of that section (duty payable under subsection (7) recoverable as a civil debt) after “duty” there shall be inserted “ , other than excise duty, ”.

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

“(8A)An amount of excise duty assessed as being due under subsection (7A) above shall, unless, or except to the extent that, the assessment has subsequently been withdrawn or reduced and subject to any appeal under section 16 of the M48Finance Act 1994, be recoverable summarily as a civil debt.”

(4)In section 1(1) of that Act (interpretation), after the definition of “registered excise dealers and shippers regulations” there shall be inserted—

• ““representative”, in relation to any person from whom the Commissioners assess an amount as being excise duty due, means his personal representative, trustee in bankruptcy or interim or permanent trustee, any receiver or liquidator appointed in relation to him or any of his property or any other person acting in a representative capacity in relation to him;”.

Assessments in cases of a deficiency in warehoused goodsU.K.

3(1)Section 94 of the M49Customs and Excise Management Act 1979 shall be amended in accordance with sub-paragraphs (2) to (6) below.U.K.

(2)In subsection (3) (power to require payment of duty or repayment of drawback or allowance where warehoused goods are deficient), for the words from “require” to the end there shall be substituted the following paragraphs—

“(a)require the occupier of the warehouse or the proprietor of the goods to pay immediately any duty, other than excise duty, chargeable or deemed under warehousing regulations to be chargeable on the relevant goods or, in the case of goods warehoused on drawback which could not lawfully be entered for home use, an amount equal to any drawback or allowance of such duty paid in respect of the relevant goods;

(b)assess, as being excise duty due from the occupier of the warehouse or the proprietor of the goods, the excise duty chargeable or deemed under warehousing regulations to be chargeable on the relevant goods or, in the case of goods warehoused on drawback which could not lawfully be entered for home use, an amount equal to any drawback or allowance of excise duty paid in respect of the relevant goods.”

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

“(3A)Where the Commissioners make an assessment under subsection (3)(b) above they shall notify the person assessed or his representative accordingly.”

(4)In subsection (4) for “(3)” there shall be substituted “ (3)(a) ”.

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

“(4A)If—

(a)the occupier of the warehouse or the proprietor of the goods refuses to pay any amount of excise duty to which he has been assessed under subsection (3)(b) above, and

(b)the conditions set out in subsection (4B) below are fulfilled,

he shall be liable on summary conviction to a penalty of double that amount.

(4B)The conditions are that—

(a)the period of forty-five days referred to in section 14(3) of the M50Finance Act 1994 (period during which review may be required) has expired;

(b)on any review under Chapter II of Part I of that Act the Commissioners’ decision (“the original decision”) in relation to the assessment has been confirmed (or treated as confirmed by virtue of section 15(2) of that Act), or confirmed subject only to a reduction in the amount of duty due under the assessment; and

(c)the final result of any further appeal is that the original decision has been confirmed, subject only to any reduction in the amount of duty due under the assessment; and “final result” means the result of the last of any such appeals, against which no appeal may be made (whether because of expiry of time or for any other reason).

(4C)Where the amount of excise duty due under subsection (3)(b) above is reduced in consequence of a review or appeal, the penalty to which the person assessed is liable under subsection (4A) above shall be a penalty of double the reduced amount.”

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

“(5A)In this section “the relevant goods” means the missing goods or the whole or any part of the deficiency, as the Commissioners see fit.”

(7)In section 95 of that Act (application of section 94 to certain goods in the course of removal from warehouse), in subsection (2)(b) (section 94 to apply with the omission of references in subsections (3) and (4) to the occupier of the warehouse) for “and (4)” there shall be substituted “ , (4) and (4A) ”.

Assessments in cases of a deficiency in goods moved by pipe-lineU.K.

4(1)Section 96 of the M51Customs and Excise Management Act 1979 shall be amended in accordance with sub-paragraphs (2) to (6) below.U.K.

(2)In subsection (2) (power to require payment of unpaid or repaid duty, or repayment of drawback, where goods moved by pipe-line are deficient) for the words from “require” to the end there shall be substituted the following paragraphs—

“(a)require the owner of the pipe-line or the proprietor of the goods to pay immediately any duty, other than excise duty, unpaid or repaid on the relevant goods or, as the case may be, an amount equal to any drawback of such duty paid on the relevant goods;

(b)assess, as being excise duty due from the owner of the pipe-line or the proprietor of the goods, the excise duty unpaid or repaid on the relevant goods or, as the case may be, an amount equal to any drawback of excise duty paid on the relevant goods.”

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

“(2A)Where the Commissioners make an assessment under subsection (2)(b) above they shall notify the person assessed or his representative accordingly.”

(4)In subsection (3) for “(2)” there shall be substituted “ (2)(a) ”.

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

“(3A)If—

(a)any person refuses to pay any amount of excise duty to which he has been assessed under subsection (2)(b) above, and

(b)the conditions set out in paragraphs (a) to (c) of section 94(4B) above (exhaustion of opportunities for review and appeal) are fulfilled,

he shall be liable on summary conviction to a penalty of double that amount.

(3B)Where the amount of excise duty due under subsection (2)(b) above is reduced in consequence of a review or appeal, the penalty to which the person assessed is liable under subsection (3A) above shall be a penalty of double the reduced amount.”

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

“(5A)In this section “the relevant goods” means the missing goods or the whole or any part of the deficiency, as the Commissioners see fit.”

Assessments in cases of untrue declarations etc.U.K.

5U.K.After section 167(4) of the Customs and Excise Management Act 1979 (recovery as a debt due to the Crown or as a civil debt of amounts of duty not paid, and of overpayments in respect of drawback etc. made, by reason of untrue declaration etc.) there shall be inserted the following subsection—

“(5)An amount of excise duty, or the amount of an overpayment in respect of any drawback, allowance, rebate or repayment of any excise duty, shall not be recoverable as mentioned in subsection (4) above unless the Commissioners have assessed the amount of the duty or of the overpayment as being excise duty due from the person mentioned in subsection (1) or (3) above and notified him or his representative accordingly.”

Assessments relating to hydrocarbon oil dutyU.K.

6(1)In section 10(3) of the M52Hydrocarbon Oil Duties Act 1979 (power to recover excise duty where restrictions on use of duty-free oil infringed), for the words from “recover” to the end there shall be substituted “ assess an amount equal to the excise duty on like oil at the rate in force at the time of the contravention as being excise duty due from him, and notify him or his representative accordingly. ”U.K.

F10(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3)In section 14(4) of that Act (power to recover rebate where light oil delivered for use as furnace fuel is misused), for the words from “recover” to the end there shall be substituted “ assess the amount of rebate allowed on the oil as being excise duty due from him, and notify him or his representative accordingly. ”

(4)After subsection (1A) of section 23 of that Act (prohibition on use of road fuel gas on which duty has not been paid) there shall be inserted the following subsection—

“(1B)Where any person—

(a)uses as fuel in, or

(b)takes as fuel into,

a road vehicle any road fuel gas on which the excise duty chargeable under section 8 above has not been paid, the Commissioners may assess the amount of that duty as being excise duty due from that person and notify him or his representative accordingly.”

(5)In subsection (2) of that section, for “subsection (1)(b)” there shall be substituted “ subsections (1)(b) and (1B)(b) ”.

(6)After subsection (4) of section 24 of that Act (control of use of duty-free and rebated oil) there shall be inserted the following subsections—

“(4A)Where—

(a)a rebate of duty is allowed on any oil, and

(b)a person contravenes or fails to comply with any requirement which, by virtue of any regulations made under this section, is a condition of allowing the rebate,

the Commissioners may assess an amount equal to the rebate as being excise duty due from that person, and notify him or his representative accordingly.

(4B)Where—

(a)any oil is delivered without payment of duty, and

(b)a person contravenes or fails to comply with any requirement which, by virtue of any regulations made under this section, is a condition of allowing the oil to be delivered without payment of duty,

the Commissioners may assess an amount equal to the excise duty on like oil at the rate in force at the time of the contravention or failure to comply as being excise duty due from that person, and notify him or his representative accordingly.”

(7)In the Table set out in section 27(3) of that Act (interpretation), under the heading “Management Act” there shall be inserted at the appropriate place “ “representative” ”.

CommencementU.K.

7U.K.This Schedule 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 paragraph for different purposes.

Section 69.

SCHEDULE 7U.K. Special treatment for certain distributions

Distributions to which Schedule appliesU.K.

[F111(1)Subject to paragraphs 4 to 7 below, this Schedule applies to any qualifying distribution which—U.K.

(a)falls within either or both of sub-paragraphs (2) and (3) below; and

(b)is a distribution made on or after 8th October 1996 by a company resident in the United Kingdom.

(2)A qualifying distribution of a company falls within this sub-paragraph if it is a payment made by that company—

(a)on the redemption, repayment or purchase of its own shares, or

(b)on the purchase of rights to acquire its own shares.

(3)A qualifying distribution of a company falls within this sub-paragraph if—

(a)arrangements are or have been made by virtue of which any one or more of the specified matters is or was made referable (in some way and to any extent) to, or to the carrying out of, a transaction in securities; and

(b)that transaction is a transaction completed on or after 8th October 1996, or some or all of those arrangements are arrangements made on or after that date.

(4)For the purposes of this Schedule the specified matters, in relation to a qualifying distribution, are—

(a)whether the distribution is made,

(b)the time when it is made,

(c)its form, and

(d)its amount.

(5)In this Schedule—

• “arrangements” means arrangements of any kind, whether in writing or not;

• “qualifying distribution” has the same meaning as in the Taxes Act 1988;

• “shares” has the same meaning as in sections 219 to 228 of that Act (purchase of own shares);

• “transaction in securities” has the same meaning as in Chapter I of Part XVII of that Act (cancellation of tax advantages from certain transactions in securities).]

Distributions treated as FIDsU.K.

[F122(1)The Tax Acts shall have effect, and be deemed in relation to any time on or after 8th October 1996 to have had effect, as if a qualifying distribution to which this Schedule applies were a foreign income dividend within the meaning of Chapter VA of Part VI of the Taxes Act 1988 and, accordingly, as if the making of the distribution were the payment of a foreign income dividend.U.K.

(2)In section 246A of the Taxes Act 1988 (elections for dividends to be treated as foreign income dividends), after subsection (2) there shall be inserted the following subsection—

“(2A)An election under this section cannot be made as regards a distribution which already falls to be treated as a foreign income dividend by virtue of paragraph 2(1) of Schedule 7 to the Finance Act 1997.”

(3)Sub-paragraph (1) above has effect subject to—

[F13(a)section 95(1A)(b) of the Taxes Act 1988 (receipt of qualifying distribution by dealer not to be treated as FID for certain purposes); and]

(b)section 247(5B) to (5D) [F14of the Taxes Act 1988] (distributions that are subject to group income elections).

(4)Sub-paragraph (2) above has effect in relation to the making of elections on or after 8th October 1996.]

Distributions treated as section 686 income of trusteesU.K.

[F153(1)This paragraph applies where—U.K.

(a)a qualifying distribution to which this Schedule applies by virtue of its falling within paragraph 1(2) above is or has been made to trustees; and

(b)those trustees are not or, as the case may be, were not the trustees of a unit trust scheme within the meaning of section 469 of the Taxes Act 1988.

(2)The relevant part of that distribution (and, accordingly, the corresponding part of the foreign income dividend that paragraph 2(1) above deems the distribution to be) shall be treated for the purposes of the Tax Acts as if it were income to which section 686 of the Taxes Act 1988 (application of rate applicable to trusts to income of certain discretionary trusts) applies.

(3)In sub-paragraph (2) above the reference to the relevant part of the distribution is a reference to so much (if any) of that distribution as—

(a)is not income falling within paragraph (a) of section 686(2) of the Taxes Act 1988 (income which is to be accumulated or which is payable at any person’s discretion);

(b)does not fall to be treated for the purposes of the Income Tax Acts as income of a settlor;

(c)is not income arising under a trust established for charitable purposes; and

(d)is not income from investments, deposits or other property held for any such purposes as are mentioned in sub-paragraph (i) or (ii) of section 686(2)(c) of the Taxes Act 1988 (property held for pension purposes).

(4)Subsection (6) of section 686 of the Taxes Act 1988 (meaning of “trustees” etc.) shall apply for the purposes of this paragraph as it applies for the purposes of that section.

(5)This paragraph has effect for the year 1997-98 and subsequent years of assessment and shall be deemed to have had effect for the year 1996-97 in relation to distributions made on or after 5th December 1996.]

Stock optionsU.K.

[F164(1)A qualifying distribution does not fall within paragraph 1(3) above by reason only that it is made in consequence of the exercise of such an option as is mentioned in section 249(1)(a) of the Taxes Act 1988 (option to receive either a cash dividend or additional share capital).U.K.

(2)Section 251(1)(c) of the Taxes Act 1988 (interpretation of references to the exercise of an option to receive either a cash dividend or additional share capital) shall apply for the purposes of this paragraph as it applies for the purposes of sections 249 and 250 of that Act.]

Dividends on fixed rate preference sharesU.K.

[F175(1)A qualifying distribution consisting in a dividend on a fixed-rate preference share does not fall within paragraph 1(3) above by reason only that any of the specified matters is made referable to the terms on which the share was issued.U.K.

(2)In this paragraph “fixed-rate preference share” means—

(a)any fixed rate preference share within the meaning of [F18paragraph 13 of Schedule 28B to] the Taxes Act 1988; or

(b)any share which would be such a share if the dividends mentioned in [F19paragraph 13(6)(c)(i) of that Schedule] included dividends fixed by reference to a standard published rate of interest.

[F20(3)For the purposes of sub-paragraph (2) above, any reference in paragraph 13(6) of Schedule 28B to shares shall be taken as a reference to shares within the meaning of this Schedule.]]

Pre-sale distributionsU.K.

[F216(1)A qualifying distribution which is an excepted pre-sale distribution does not fall within paragraph 1(3) above if the only transactions in securities to which any of the specified matters are referable are relevant transactions.U.K.

(2)For the purposes of this paragraph, a qualifying distribution of a company is an excepted pre-sale distribution if, in the period beginning with the making of the distribution and ending with the fourteenth day after the day on which the distribution is made, there is a major change in the ownership of that company.

(3)For the purposes of sub-paragraph (2) above, there is a major change in the ownership of a company in any period if, in that period—

(a)a single person acquires a holding of 75 per cent. or more of the ordinary share capital of the company; or

(b)each of two or more persons acquires a holding of ordinary share capital of the company, and the holdings together amount to 75 per cent. or more of the ordinary share capital of the company.

(4)For the purposes of this paragraph a relevant transaction, in relation to any excepted pre-sale distribution, is any transaction in securities by which the holding or, as the case may be, any of the holdings mentioned in sub-paragraph (3) above is acquired.

(5)In applying sub-paragraph (3) above—

(a)the circumstances at any two points in time falling within the period in question may be compared, and a holder at the later time may be regarded as having acquired in that period whatever he did not hold at the earlier time, irrespective of what he has acquired or disposed of in between;

(b)to allow for any issue of shares or other reorganisation of capital, any such comparison may be made in terms of percentage holdings of the total ordinary share capital at the respective times, so that a person whose percentage holding is greater at the later time may be regarded as having acquired in the period a percentage holding equal to the increase;

(c)any acquisition of shares under the will or on the intestacy of a deceased person, and any gift of shares which is unsolicited and made without regard to the provisions of paragraphs 2 and 3 above, shall be left out of account.

(6)For the purposes of this paragraph, where—

(a)persons, whether company members or not, possess extraordinary rights or powers under the articles of association of a company or under any other document regulating the company, and

(b)because of that fact, ownership of the ordinary share capital may not be an appropriate test of whether there has been a major change in the ownership of the company,

then, in considering whether there has been a major change in the ownership of the company, holdings of all kinds of share capital, including preference shares, or of any particular kind of share capital, or voting power or any other special kind of power, shall be taken into account, and holdings of ordinary share capital shall be disregarded, to such extent as may be appropriate.

(7)For the purposes of this paragraph, references to ownership shall be construed as references to beneficial ownership, and references to acquisition shall be construed accordingly.]

Manufactured paymentsU.K.

[F227(1)A manufactured dividend shall not be taken to be a qualifying distribution to which this Schedule applies except in pursuance of sub-paragraph (2) below.U.K.

(2)Where a payment is made which is representative of a qualifying distribution to which this Schedule applies, that payment shall be deemed to be such a distribution for all the purposes of the Tax Acts, except those for which Schedule 23A to the Taxes Act 1988 (manufactured payments) makes provision in relation to the payment which is different from the provision applying to distributions to which this Schedule applies.

(3)For the purposes of Schedule 23A to the Taxes Act 1988 a payment which is representative of a payment falling within paragraph 1(2) above shall be treated as if it were representative of a dividend on the shares redeemed, repaid or purchased or, as the case may be, on the shares to which the right relates.

(4)In this paragraph “manufactured dividend” has the same meaning as in Schedule 23A to the Taxes Act 1988.]

Amendment of section 95 of the Taxes Act 1988U.K.

8(1)In section 95 of the Taxes Act 1988 (taxation of distributions received by dealers on purchase by a company of its own shares), for subsections (1) to (3) there shall be substituted the following subsections—U.K.

“(1)Each of the following, that is to say—

(a)any qualifying distribution to which Schedule 7 to the Finance Act 1997 (special treatment for certain distributions) applies which is received by a dealer, and

(b)any payment by a dealer which is representative of a qualifying distribution to which that Schedule applies,

shall be taken into account in computing the profits of the dealer which are chargeable to tax in accordance with the provisions of this Act applicable to Case I or II of Schedule D.

(1A)Accordingly, where a dealer receives a qualifying distribution to which Schedule 7 to the Finance Act 1997 applies—

(a)tax shall not be charged under Schedule F in respect of that distribution;

(b)that distribution shall not be treated for the purposes of sections 246D and 246F as a foreign income dividend received by the dealer;

(c)sections 208 and 234(1) shall not apply to that distribution; and

(d)paragraph 2A(2) of Schedule 23A shall not apply to the payment by the dealer of an amount which is representative of that distribution and is paid by him on or after the date appointed under paragraph 16(1) of Schedule 10 to the Finance Act 1997.

(1B)Where the result of any transaction is that a qualifying distribution to which Schedule 7 to the Finance Act 1997 applies is receivable by a dealer, that distribution shall not, in relation to that transaction, be treated as interest for the purposes of determining whether section 732 applies by virtue of section 731.

(2)For the purposes of this section a person is a dealer in relation to any qualifying distribution if—

(a)were there a sale by that person of the shares in respect of which the distribution is made, and

(b)the circumstances of that sale were such that the price would not fall to be treated as a qualifying distribution,

the price would be taken into account in computing the profits of that person which are chargeable to tax in accordance with the provisions of this Act applicable to Case I or II of Schedule D.”

(2)In that Act—

F23(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b)in section 234(1) (information relating to distributions), for “95(1)(c)” there shall be substituted “ 95(1A)(c) ”.

(3)This paragraph has effect in relation to distributions made on or after 26th November 1996.

Information to be provided about deemed FIDU.K.

[F249(1)In section 246G(1)(d) of that Act (information to be provided about a foreign income dividend), after “carries no entitlement to a tax credit” there shall be inserted “ and, in the case of a qualifying distribution to which Schedule 7 to the Finance Act 1997 applies, that it is a foreign income dividend by virtue of paragraph 2(1) of that Schedule ”.U.K.

(2)This paragraph has effect in relation to distributions made on or after 26th November 1996.]

Group incomeU.K.

[F2510(1)In subsection (5A) of section 247 of that Act (under which the group income provisions do not apply to FIDs), at the beginning there shall be inserted the words “ Subject to subsections (5B) to (5D) below, ”; and after that subsection there shall be inserted the following subsections—U.K.

“(5B)Where—

(a)a company falling within subsection (5C) below and resident in the United Kingdom receives a dividend, and

(b)that dividend would, apart from subsection (5D) below, be a distribution to which Schedule 7 to the Finance Act 1997 (special treatment for certain distributions) applies,

the dividend shall be taken to be one in relation to which an election under subsection (1) above may have effect in accordance with this section.

(5C)The receiving company falls within this subsection if—

(a)it directly or indirectly owns all the ordinary share capital of the paying company, or

(b)all the ordinary share capital of the paying company is owned directly or indirectly by a company resident in the United Kingdom which also owns, directly or indirectly, all the ordinary share capital of the receiving company;

and section 838 shall apply for construing the references in this subsection to directly or indirectly owning ordinary share capital of a company.

(5D)If an election under subsection (1) above has effect in relation to such a distribution as is mentioned in subsection (5B) above, that distribution shall be deemed to be a distribution to which Schedule 7 to the Finance Act 1997 does not apply.”

(2)This paragraph has effect in relation to distributions made on or after 26th November 1996.]

Distribution accountsU.K.

[F2611(1)In section 468I of that Act (distribution accounts of authorised unit trusts), after subsection (5) there shall be inserted the following subsection—U.K.

“(5A)The following amounts shown as available for distribution in the distribution accounts must be shown in those accounts as available for distribution as foreign income dividends—

(a)amounts deriving from qualifying distributions to which Schedule 7 to the Finance Act 1997 (special treatment for certain distributions) applies; and

(b)so much of any amounts not falling within paragraph (a) above as, if shown as available for distribution as dividends, would fall to be treated as distributions to which that Schedule applies.”

(2)This paragraph applies to distribution accounts for any distribution period ending on or after 26th November 1996.]

Amendments consequential on paragraph 3 aboveU.K.

12(1)In section 686 of that Act (application of rate applicable to trusts to income of certain discretionary trusts), paragraph (d) of subsection (2) shall be omitted; and after that subsection there shall be inserted the following subsection—U.K.

“(2AA)The rate at which income tax is chargeable on so much of any income arising to trustees in any year of assessment as—

(a)is income to which this section applies, and

(b)is treated in accordance with section 689B as applied in defraying the expenses of the trustees in that year which are properly chargeable to income (or would be so chargeable but for any express provisions of the trust),

shall be the rate at which it would be chargeable on that income apart from this section, instead of the rate applicable to trusts.”

(2)In subsection (2A) of that section, for “subsection (2)(d)” there shall be substituted “ subsection (2AA) ”.

F27(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4)This paragraph has effect for the year 1997-98 and subsequent years of assessment and shall be deemed to have had effect for the year 1996-97.

Section 74.

SCHEDULE 8U.K. Enterprise investment scheme: qualifying companies

IntroductoryU.K.

1U.K.Chapter III of Part VII of the Taxes Act 1988 (the enterprise investment scheme)—

(a)in its application in relation to shares issued after 26th November 1996, and

(b)in its application after 26th November 1996 in relation to shares which—

(i)were issued on or after 1st January 1994 but before 27th November 1996, and

(ii)immediately before 27th November 1996 were held by an individual and at that time were shares to which, within the meaning of that Chapter, any relief was attributable,

shall have effect with the following amendments.

Requirements to be satisfied by the company for whose business activity money is raisedU.K.

2(1)In subsection (1) of section 289 (conditions for eligibility for relief), immediately before the word “and” at the end of paragraph (b) there shall be inserted the following paragraph—U.K.

“(ba)the requirements of subsection (1A) below are satisfied in relation to the company,”.

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

“(1A)The requirements of this subsection are satisfied in relation to a qualifying company if throughout the relevant period the active company—

(a)is such a company as is mentioned in section 293(2)(a), or

(b)would be such a company if its purposes were disregarded to the extent that they consist in the carrying on of activities such as are mentioned in section 293(3D)(a) and (b) and (3E)(a), or

(c)is a subsidiary of the qualifying company and falls within subsection (1B) below.

(1B)A subsidiary of the qualifying company falls within this subsection if—

(a)apart from purposes capable of having no significant effect (other than in relation to incidental matters) on the extent of its activities, it exists wholly for the purpose of carrying on activities such as are mentioned in section 293(3D)(b); or

(b)it has no profits for the purposes of corporation tax and no part of its business consists in the making of investments.

(1C)In subsection (1A) above “the active company” means the qualifying company or, where the qualifying business activity mentioned in subsection (1) above consists in a subsidiary of that company carrying on or preparing to carry on a qualifying trade, research and development or oil exploration, that subsidiary.

(1D)Subsection (6) of section 293 shall apply in relation to the requirements of subsection (1A) above as it applies in relation to subsection (2) of that section.”

Limit on relief for trading groups which let or operate shipsU.K.

3(1)In subsection (6) of section 290A (maximum sum eligible for relief in cases of trades involving the letting or operating of ships), for paragraphs (b) and (c) there shall be substituted “or U.K.

(aa)in the case of a company falling within subsection (2)(aa) of that section—

(i)it satisfies the requirements of subsection (6A) below, and

(ii)each of its subsidiaries is a shipping company,”.

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

“(6A)A company satisfies the requirements of this subsection if, apart from purposes capable of having no significant effect (other than in relation to incidental matters) on the extent of its activities, the company exists wholly—

(a)for the purpose of carrying on activities such as are mentioned in section 293(3D)(a) and (b); or

(b)for the purpose of carrying on one or more qualifying trades which or each of which is a trade to which subsection (7) below applies; or

(c)for any combination of the purposes mentioned in paragraphs (a) and (b) above.

(6B)For the purposes of subsection (6) above a subsidiary of a company falling within section 293(2)(aa) is a shipping company if—

(a)that subsidiary satisfies the requirements of subsection (6A) above, or

(b)it would satisfy those requirements if the reference in subsection (6A)(a) above to section 293(3D)(a) and (b) included a reference to section 293(3E)(a), or

(c)it has no profits for the purposes of corporation tax and no part of its business consists in the making of investments.”

Meaning of “qualifying company”U.K.

4(1)In subsection (2) of section 293 (meaning of “qualifying company”), for paragraph (b) there shall be substituted the following paragraph—U.K.

“(aa)the parent company of a trading group.”

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

“(3A)For the purposes of this section a company is the parent company of a trading group if—

(a)it has one or more subsidiaries;

(b)each of its subsidiaries is a qualifying subsidiary of the company; and

(c)the requirements of subsection (3B) below are fulfilled by what would be the business of the company and its subsidiaries if all the activities, taken together, of the company and its subsidiaries were regarded as one business.

(3B)A business fulfils the requirements of this subsection if neither the business nor a substantial part of it consists in, or in either of, the following, that is to say—

(a)activities falling within section 297(2)(a) to (g) but not within subsection (3C) below; and

(b)activities carried on otherwise than in the course of a trade.

(3C)The activities falling within this subsection are—

(a)the receiving of royalties or licence fees in circumstances where the requirements mentioned in paragraphs (a) and (b) of section 297(4) or (5) are satisfied in relation to the company receiving them;

(b)the letting of ships, other than oil rigs or pleasure craft, on charter in circumstances where the requirements mentioned in paragraphs (a) to (d) of section 297(6) are satisfied in relation to the company so letting them.

(3D)Activities of a company or of any of its subsidiaries shall be disregarded for the purposes of subsections (3A) to (3C) above to the extent that they consist in—

(a)the holding of shares in or securities of, or the making of loans to, one or more of the company’s subsidiaries; or

(b)the holding and managing of property used by the company or any of its subsidiaries for the purposes of—

(i)research and development from which it is intended that a qualifying trade to be carried on by the company or any of its subsidiaries will be derived; or

(ii)one or more qualifying trades so carried on.

(3E)Activities of a subsidiary of a company shall also be disregarded for the purposes of subsections (3A) to (3C) above to the extent that they consist in—

(a)the making of loans to the company; or

(b)in the case of a mainly trading subsidiary, activities carried on otherwise than in pursuance of its main purpose.

(3F)For the purposes of subsection (3E) above—

(a)“mainly trading subsidiary” means a subsidiary which, apart from purposes capable of having no significant effect (other than in relation to incidental matters) on the extent of its activities, exists wholly for the purpose of carrying on one or more qualifying trades; and

(b)that purpose shall be taken to be its main purpose.”

Consequential amendments of section 297U.K.

5U.K.In section 297(3)(c)(i), and in the words after paragraph (d) in section 297(6) (which refer to the activities falling within section 297(2)), for “(2)” there shall be substituted “ (2)(a) to (g) ”.

Consequential repeals of provisions about subsidiariesU.K.

6U.K.In section 308 (subsidiaries)—

(a)paragraph (b) of subsection (1), and the word “and” immediately preceding that paragraph, and

(b)paragraphs (a) and (b) of subsection (5),

shall be omitted.

Section 75.

SCHEDULE 9U.K. Venture capital trusts: qualifying holdings

IntroductoryU.K.

1U.K.Schedule 28B to the Taxes Act 1988 (venture capital trusts: meaning of “qualifying holdings”) shall be amended as follows.

Requirements as to business of company whose shares etc. are qualifying holdingsU.K.

2(1)In paragraph 3 (requirements as to company’s business), for paragraphs (b) and (c) of sub-paragraph (2) (company must be of one of the given descriptions) there shall be substituted “or U.K.

(aa)the parent company of a trading group.”

(2)After sub-paragraph (5) of that paragraph there shall be inserted the following sub-paragraphs—

“(6)For the purposes of this paragraph a company is the parent company of a trading group if—

(a)it has one or more subsidiaries;

(b)each of its subsidiaries is a qualifying subsidiary of the company; and

(c)the requirements of sub-paragraph (7) below are fulfilled by what would be the business of the company and its qualifying subsidiaries if all the activities, taken together, of the company and its qualifying subsidiaries were regarded as one business.

(7)A business fulfils the requirements of this sub-paragraph if neither the business nor a substantial part of it consists in, or in either of, the following, that is to say—

(a)activities falling within paragraph 4(2)(a) to (f) below but not within sub-paragraph (8) below; and

(b)activities carried on otherwise than in the course of a trade.

(8)The activities falling within this sub-paragraph are—

(a)the receiving of royalties or licence fees in circumstances where the requirements mentioned in paragraphs (a) and (b) of paragraph 4(5) or (6) below are satisfied in relation to the company receiving them;

(b)the letting of ships, other than oil rigs or pleasure craft, on charter in circumstances where the requirements mentioned in paragraphs (a) to (d) of paragraph 4(7) below are satisfied in relation to the company so letting them.

(9)Activities of a company or of any of its qualifying subsidiaries shall be disregarded for the purposes of sub-paragraphs (6) to (8) above to the extent that they consist in—

(a)the holding of shares in or securities of, or the making of loans to, one or more of the company’s qualifying subsidiaries; or

(b)the holding and managing of property used by the company or any of its qualifying subsidiaries for the purposes of—

(i)research and development from which it is intended that a qualifying trade to be carried on by the company or any of its qualifying subsidiaries will be derived; or

(ii)one or more qualifying trades so carried on.

(10)Activities of a qualifying subsidiary of a company shall also be disregarded for the purposes of sub-paragraphs (6) to (8) above to the extent that they consist in—

(a)the making of loans to the company; or

(b)in the case of a mainly trading subsidiary, activities carried on in pursuance of its insignificant purposes (within the meaning given by sub-paragraph (11) below).

(11)In sub-paragraph (10) above “mainly trading subsidiary” means a qualifying subsidiary which, apart from purposes (“its insignificant purposes”) which are capable of having no significant effect (other than in relation to incidental matters) on the extent of its activities, exists wholly for the purpose of carrying on one or more qualifying trades.”

Consequential amendment of paragraph 4(7)U.K.

3U.K.In paragraph 4(7), in the words after paragraph (d) (which contain a reference to activities of a kind falling within paragraph 4(2)) for “(2)” there shall be substituted “ (2)(a) to (f) ”.

Application of investmentU.K.

4U.K.In paragraph 6 (requirements as to the money raised by the investment in question), after sub-paragraph (2) there shall be inserted the following sub-paragraphs—

“(2A)Where the relevant company is a company falling within paragraph 3(2)(aa) above, the requirements of this paragraph are not satisfied unless—

(a)the trader company is a company in relation to which the requirements of paragraph 3(2)(a) above are satisfied, or

(b)the trader company is a company in relation to which those requirements would be satisfied if its purposes were disregarded to the extent that they consist in the carrying on of activities such as are mentioned in paragraph 3(9)(a) and (b) and (10)(a) above, or

(c)the trader company is a qualifying subsidiary of the relevant company and falls within sub-paragraph (2B) below.

(2B)A qualifying subsidiary of the relevant company falls within this sub-paragraph if—

(a)apart from purposes capable of having no significant effect (other than in relation to incidental matters) on the extent of its activities, it exists wholly for the purpose of carrying on activities such as are mentioned in paragraph 3(9)(b) above; or

(b)it has no profits for the purposes of corporation tax and no part of its business consists in the making of investments.

(2C)In sub-paragraph (2A) above “the trader company” means the company (whether the relevant company or a qualifying subsidiary of the relevant company) carrying on, or preparing to carry on, the trade by reference to which the requirements of paragraph 3(3) above are satisfied.”

Qualifying subsidiariesU.K.

5(1)In sub-paragraph (1) of paragraph 10 (meaning of “qualifying subsidiary”), for “each of sub-paragraphs (2) and” there shall be substituted “ sub-paragraph ”.U.K.

(2)Sub-paragraph (2) of that paragraph (requirements as to purposes for which subsidiaries exist) shall be omitted.

(3)In each of sub-paragraphs (4) and (5) of that paragraph (which contain references to companies falling within sub-paragraphs (2) and (3)), for “sub-paragraphs (2) and” there shall be substituted “ sub-paragraph ”.

(4)In sub-paragraph (4)(a) of that paragraph, for “those sub-paragraphs” there shall be substituted “ that sub-paragraph ”.

CommencementU.K.

6U.K.This Schedule has effect for the purposes of determining whether shares or securities are, as at any time after 26th November 1996, to be regarded as comprised in a company’s qualifying holdings.

Section 76.

SCHEDULE 10U.K. Stock lending arrangements and manufactured payments

Part IU.K. Stock lending

Approved stock lending arrangements: tradersU.K.

1(1)Section 129 of the Taxes Act 1988 (treatment of approved stock lending arrangements when computing the profits of a trade) shall cease to have effect.U.K.

(2)Section 129A of, and Schedule 5A to, that Act (interest on cash collateral for approved stock lending arrangements) shall also cease to have effect.

Stock lending feesU.K.

2(1)In subsection (3) of section 129B of the Taxes Act 1988 (stock lending fees under approved stock lending arrangements), for “an approved” there shall be substituted “ any ”.U.K.

(2)For subsection (4) of that section (meaning of approved stock lending arrangement) there shall be substituted the following subsection—

“(4)In this section “stock lending arrangement” has the same meaning as in section 263B of the 1992 Act.”

Stock lending agreements under which manufactured payments are not madeU.K.

3U.K.After section 736A of the Taxes Act 1988 (manufactured dividends and interest) there shall be inserted the following section—

“736B Deemed manufactured payments in the case of stock lending arrangements.

(1)This section applies where—

(a)any interest on securities transferred by the lender under a stock lending arrangement is paid, as a consequence of the arrangement, to a person other than the lender; and

(b)no provision is made for securing that the lender receives payments representative of that interest.

(2)Where this section applies, Schedule 23A and the provisions for the time being contained in any regulations under that Schedule shall apply as if—

(a)the borrower were required under the stock lending arrangement to pay the lender an amount representative of the interest mentioned in subsection (1)(a) above;

(b)a payment were made by the borrower in discharge of that requirement; and

(c)that payment were made on the same date as the payment of the interest of which it is representative.

(3)In this section—

• “interest” includes dividends; and

• “stock lending arrangement” and “securities” have the same meanings as in section 263B of the 1992 Act.”

Manufactured payments in stock lending cases etc.U.K.

4U.K.In Schedule 23A to the Taxes Act 1988 (manufactured payments)—

(a)paragraph 6 (unapproved manufactured payments) shall cease to have effect; and

(b)in paragraph 7(3)—

(i)in paragraph (a), the words “except where paragraph 6 above applies, and” shall be omitted;

(ii)paragraph (b) shall be omitted; and

(iii)for the words “3, 4 or 6” there shall be substituted “ 3 or 4 ”.

Stock lending arrangements: capital gainsU.K.

5(1)After section 263A of the M53Taxation of Chargeable Gains Act 1992 (agreements for sale and repurchase of securities) there shall be inserted the following sections—U.K.

“263B Stock lending arrangements.

(1)In this section “stock lending arrangement” means so much of any arrangements between two persons (“the borrower” and “the lender”) as are arrangements under which—

(a)the lender transfers securities to the borrower otherwise than by way of sale; and

(b)a requirement is imposed on the borrower to transfer those securities back to the lender otherwise than by way of sale.

(2)Subject to the following provisions of this section and section 263C(2), the disposals and acquisitions made in pursuance of any stock lending arrangement shall be disregarded for the purposes of capital gains tax.

(3)Where—

(a)the borrower under any stock lending arrangement disposes of any securities transferred to him under the arrangement,

(b)that disposal is made otherwise than in the discharge of the requirement for the transfer of securities back to the lender, and

(c)that requirement, so far as it relates to the securities disposed of, has been or will be discharged by the transfer of securities other than those transferred to the borrower,

any question relating to the acquisition of the securities disposed of shall be determined (without prejudice to the provisions of Chapter I of Part IV) as if the securities disposed of were the securities with which that requirement (so far as relating to the securities disposed of) has been or will be discharged.

(4)Where, in the case of any stock lending arrangement, it becomes apparent, at any time after the making of the transfer by the lender, that the requirement for the borrower to make a transfer back to the lender will not be complied with—

(a)the lender shall be deemed for the purposes of this Act to have made a disposal at that time of the securities transferred to the borrower;

(b)the borrower shall be deemed to have acquired them at that time; and

(c)subsection (3) above shall have effect in relation to any disposal before that time by the borrower of securities transferred to him by the lender as if the securities deemed to have been acquired by the borrower in accordance with paragraph (b) above were to be used for discharging a requirement to transfer securities back to the lender.

(5)References in this section, in relation to a person to whom securities are transferred, to the transfer of those securities back to another person shall be construed as if the cases where those securities are taken to be transferred back to that other person included any case where securities of the same description as those securities are transferred to that other person either—

(a)in accordance with a requirement to transfer securities of the same description; or

(b)in exercise of a power to substitute securities of the same description for the securities that are required to be transferred back.

(6)For the purposes of this section securities shall not be taken to be of the same description as other securities unless they are in the same quantities, give the same rights against the same persons and are of the same type and nominal value as the other securities.

(7)In this section—

• “interest” includes dividends; and

• “securities” means United Kingdom equities, United Kingdom securities or overseas securities (within the meaning, in each case, of Schedule 23A to the Taxes Act).

263C Stock lending involving redemption.

(1)In section 263B references to the transfer back to a person of securities transferred by him shall be taken to include references to the payment to him, in pursuance of an obligation arising on any person’s becoming entitled to receive an amount in respect of the redemption of those securities, of an amount equal to the amount of the entitlement.

(2)Where, in pursuance of any such obligation, the lender under any stock lending arrangement is paid any amount in respect of the redemption of any securities to which the arrangement relates—

(a)that lender shall be deemed for the purposes of this Act to have disposed, for that amount, of the securities in respect of whose redemption it is paid (“the relevant lent securities”);

(b)the borrower shall not, in respect of the redemption, be taken for the purposes of this Act to have made any disposal of the relevant lent securities; and

(c)section 263B(3) shall have effect in relation to disposals of any of the relevant lent securities made by the borrower before the redemption as if—

(i)the amount paid to the lender were an amount paid for the acquisition of securities, and

(ii)the securities acquired were to be used by the borrower for discharging a requirement under the arrangement to transfer the relevant lent securities back to the lender.

(3)Expressions used in this section and section 263B have the same meanings in this section as in that section.”

(2)Section 271(9) of that Act (treatment of approved stock lending arrangements) shall cease to have effect.

(3)In section 727(2) of the Taxes Act 1988 (stock lending and the accrued income scheme), for “section 271(9) of the 1992 Act” there shall be substituted “ section 263B(2) of the 1992 Act ”.

Premiums trust funds of Lloyd’s membersU.K.

6U.K.The following provisions of Chapter III of Part II of the M54Finance Act 1993 and Chapter V of Part IV of the M55Finance Act 1994 (Lloyd’s members) shall cease to have effect—

(a)section 174(4) and (5) and section 182(1)(ca)(i) of that Act of 1993 (stock lending arrangements applying to securities in the premiums trust funds of individual members); and

(b)section 222(4) and (5) and section 229(ca)(i) of that Act of 1994 (which makes corresponding provision for the premiums trust funds of corporate members).

CommencementU.K.

7(1)This Part of this Schedule (except paragraph 4 above) has effect in relation to, and to transfers under, any arrangement made on or after such day as the Treasury may by order made by statutory instrument appoint.U.K.

(2)Paragraph 4 above has effect in relation to any manufactured payment made on or after the day appointed under sub-paragraph (1) above.

Part IIU.K. Manufactured payments

Repeal of section 737 of the Taxes Act 1988U.K.

8U.K.Section 737 of the Taxes Act 1988 (manufactured dividends: treatment of tax deducted) shall cease to have effect.

Meaning of “foreign income dividend”U.K.

[F289U.K.In paragraph 1(1) of Schedule 23A to that Act (interpretation of that Schedule), after the definition of “dividend manufacturing regulations” there shall be inserted the following definition—

• ““foreign income dividend” shall be construed in accordance with Chapter VA of Part VI;”.]

Manufactured dividends on UK equitiesU.K.

10(1)For paragraph 2 of Schedule 23A to that Act (manufactured dividends on UK equities) there shall be substituted the following paragraphs—U.K.

“ Manufactured dividends on UK equities: generalU.K.

2(1)This paragraph applies in any case where, under a contract or other arrangements for the transfer of United Kingdom equities, one of the parties (a “dividend manufacturer”) is required to pay to the other (“the recipient”) an amount (a “manufactured dividend”) which is representative of a dividend on the equities.

(2)A manufactured dividend paid by a dividend manufacturer who is a company resident in the United Kingdom shall be treated for the purposes of the Tax Acts as if the amount paid were a dividend of the dividend manufacturer.

(3)Where a manufactured dividend to which sub-paragraph (2) above does not apply is paid by any person—

(a)an amount of tax representing the advance corporation tax that would have been payable in respect of the manufactured dividend if—

(i)the dividend manufacturer were a company resident in the United Kingdom, and

(ii)the manufactured dividend were a distribution by that company,

shall be accounted for to the extent, and in the manner, specified in dividend manufacturing regulations;

(b)the Tax Acts shall have effect in relation to the recipient, and persons claiming title through or under him, as if the manufactured dividend were a dividend on the United Kingdom equities in question; and

(c)the Tax Acts shall have effect in relation to the dividend manufacturer subject to the provisions of paragraph 2A below.

(4)The persons who, under dividend manufacturing regulations, may be made liable to account for an amount of tax as mentioned in sub-paragraph (3)(a) above are—

(a)the dividend manufacturer, in the case of a manufactured dividend to which sub-paragraph (5) below applies; and

(b)the recipient, in the case of a manufactured dividend to which that sub-paragraph does not apply.

(5)This sub-paragraph applies to a manufactured dividend if—

(a)the dividend manufacturer is a person resident in the United Kingdom who is not a company; or

(b)the following two conditions are satisfied in the case of that manufactured dividend, that is to say—

(i)the dividend manufacturer is a company that is not so resident but carries on a trade in the United Kingdom through a branch or agency; and

(ii)the requirement to pay the manufactured dividend is attributable to the carrying on of a trade carried on through that branch or agency.

(6)Subject to paragraph 2B(2)(b) below, where—

(a)a dividend manufacturer pays a manufactured dividend, and

(b)that dividend manufacturer is, in respect of that dividend, required under dividend manufacturing regulations to account for an amount of tax such as is mentioned in sub-paragraph (3)(a) above,

the dividend manufacturer shall, on paying the manufactured dividend, provide the recipient with a statement in writing setting out the matters specified in sub-paragraph (7) below.

(7)Those matters are—

(a)the amount of the manufactured dividend;

(b)the date of the payment of the manufactured dividend; and

(c)the amount of the tax credit to which, by virtue of sub-paragraph (3)(b) above, the recipient or a person claiming title through or under him either—

(i)is entitled in respect of the manufactured dividend, or

(ii)would be so entitled were all the conditions of a right to a tax credit satisfied, in the case of the recipient or that person, as respects the dividend which the recipient is deemed to receive.

(8)The duty imposed by sub-paragraph (6) above shall be enforceable at the suit or instance of the recipient.

Deductibility of manufactured payment in the case of the manufacturerU.K.

2A(1)Where, in the case of a manufactured dividend, the dividend manufacturer—

(a)is resident in the United Kingdom, but

(b)is not a company,

the amount of the manufactured dividend actually paid (so far as is it is not otherwise deductible), together with an amount equal to the notional ACT, shall be allowable for the purposes of income tax as a deduction against the total income of the dividend manufacturer.

(2)Where, in the case of a manufactured dividend, the dividend manufacturer is a company which is not resident in the United Kingdom, no amount at all shall be deductible, in the case of that company, in respect of the payment of that manufactured dividend.

(3)The reference in sub-paragraph (1) above to an amount equal to the notional ACT is a reference to the amount equal to the advance corporation tax that would be payable in respect of the manufactured dividend if—

(a)the dividend manufacturer were a company resident in the United Kingdom, and

(b)the manufactured dividend were a distribution by that company.

(4)The references in this paragraph to an amount being deductible are references to its being either—

(a)deductible in computing the amount of any of the dividend manufacturer’s profits or gains for the purposes of income tax or corporation tax; or

(b)deductible for those purposes from the total income or, as the case may be, total profits of the dividend manufacturer.

Manufactured dividends representative of foreign income dividendsU.K.

2B(1)Where a manufactured dividend to which paragraph 2(2) above applies is representative of a foreign income dividend, the Tax Acts shall have effect for all purposes as if—

(a)the deemed dividend of the dividend manufacturer were itself a foreign income dividend; and

(b)that foreign income dividend were one in respect of which the dividend manufacturer is not liable to make any payment of advance corporation tax.

(2)Where a manufactured dividend to which paragraph 2(3) above applies is representative of a foreign income dividend—

(a)the Tax Acts shall have effect, in relation to the recipient and any persons claiming title through or under him, as if the dividend on the United Kingdom equities which the recipient is treated as having received were a foreign income dividend;

(b)there shall be no requirement for any person to account for tax in respect of that manufactured dividend by virtue of paragraph 2(3)(a) above;

(c)any deduction made in respect of the manufactured dividend under paragraph 2A(1) above shall be made without including an amount equal to the notional ACT in the deduction; and

(d)the dividend manufacturer, on paying the manufactured dividend in any case falling within sub-paragraph (3) below, shall provide the recipient with a statement in writing setting out the matters specified in sub-paragraph (4) below.

(3)A case falls within this sub-paragraph where, were it not for sub-paragraph (2)(a) and (b) above, the dividend manufacturer would be required to provide such a statement as is mentioned in paragraph 2(6) above.

(4)Those matters are—

(a)the amount of the manufactured dividend;

(b)the date on which it is paid;

(c)the fact that the dividend carries no entitlement to a tax credit; and

(d)in the case of a manufactured dividend which is representative of a qualifying distribution to which Schedule 7 to the Finance Act 1997 applies, the fact that the distribution is a foreign income dividend by virtue of paragraph 2(1) of that Schedule.

(5)The Board may give directions as to the form that must be taken by a statement provided for the purposes of sub-paragraph (2)(d) above.

(6)The duty imposed by sub-paragraph (2)(d) above shall be enforceable at the suit or instance of the recipient.”

[F29(2)In section 246F(4) of that Act (calculation of ACT where company receives foreign income dividend), for “paragraph 2(6)” there shall be substituted “ paragraph 2B(1) ”.

(3)In paragraph 9A of Schedule 13 to that Act (exception for manufactured foreign income dividends), for “paragraph 2(2) and (6)” there shall be substituted “ paragraphs 2(2) and 2B(1) ”.]

Manufactured interest on UK securitiesU.K.

11(1)For paragraphs 3 and 3A of Schedule 23A to that Act (manufactured interest on UK securities) there shall be substituted the following paragraphs—U.K.

“ Manufactured interest on UK securities: generalU.K.

3(1)This paragraph applies (subject to paragraph 3A below) in any case where, under a contract or other arrangements for the transfer of United Kingdom securities, one of the parties (an “interest manufacturer”) is required to pay to the other (“the recipient”) an amount (“the manufactured interest”) which is representative of a periodical payment of interest on the securities.

(2)For the relevant purposes of the Tax Acts, in their application in relation to the interest manufacturer—

(a)the manufactured interest shall be treated, except in determining whether it is deductible, as if it—

(i)were an annual payment to the recipient, but

(ii)were neither yearly interest nor an amount payable wholly out of profits or gains brought into charge for income tax;

(b)the gross amount of that deemed annual payment shall be taken—

(i)to be equal to the gross amount of the interest of which the manufactured interest is representative; and

(ii)to constitute income of the recipient falling within section 1A;

and

(c)an amount equal to so much of the gross amount of the manufactured interest as is not otherwise deductible shall be allowable as a deduction against the total income or, as the case may be, total profits of the interest manufacturer.

(3)For the relevant purposes of the Tax Acts, in their application in relation to the recipient and any persons claiming title through or under him—

(a)the manufactured interest shall be treated as if it were a periodical payment of interest on the securities in question; and

(b)the gross amount of that deemed periodical payment of interest shall be taken to be equal to the gross amount of the interest of which the manufactured interest is representative.

(4)Sub-paragraph (2) above shall not require any deduction of tax to be made by the interest manufacturer if—

(a)the interest manufacturer is not resident in the United Kingdom, and

(b)the manufactured interest is paid otherwise than in the course of a trade carried on by the interest manufacturer in the United Kingdom through a branch or agency.

(5)Where, in a case falling within sub-paragraph (4)(a) and (b) above, the recipient—

(a)is resident in the United Kingdom, or

(b)(without being so resident) receives the manufactured interest for the purposes of a trade carried on by him in the United Kingdom through a branch or agency,

the recipient shall be liable to account for income tax in respect of the manufactured interest.

(6)The amount of the income tax for which the recipient is liable to account under sub-paragraph (5) above is the amount equal to the income tax which the interest manufacturer, had he been resident in the United Kingdom, would have been required, in respect of the manufactured interest, to account for and pay by virtue of sub-paragraph (2) above.

(7)For the purposes of sub-paragraph (2) above, if the interest manufacturer is a company which—

(a)is not resident in the United Kingdom, but

(b)carries on a trade in the United Kingdom through a branch or agency,

Schedule 16 shall have effect in relation to the manufactured interest as it has effect in the case of a company which is resident in the United Kingdom but as if, in paragraph 7, the words “section 11(3)” were substituted for the words “section 7(2)”.

(8)Where sub-paragraph (2) above has effect in the case of any manufactured interest so as to require any amount to be deducted by way of tax from the gross amount of the manufactured interest, the interest manufacturer shall, on paying the manufactured interest, provide the recipient with a statement in writing setting out—

(a)the gross amount of the manufactured interest;

(b)the amount deducted by way of tax by the interest manufacturer;

(c)the amount actually paid by the interest manufacturer; and

(d)the date of the payment by the interest manufacturer.

(9)The duty imposed by sub-paragraph (8) above shall be enforceable at the suit or instance of the recipient.

(10)The references in this paragraph to an amount being deductible are references to its being either—

(a)deductible in computing the amount of any of the interest manufacturer’s profits or gains for the purposes of income tax or corporation tax; or

(b)deductible for those purposes from the total income or, as the case may be, total profits of the interest manufacturer.

(11)For the purposes of this paragraph “the relevant purposes of the Tax Acts” means all the purposes of those Acts except the purposes of Chapter II of Part IV of the M56Finance Act 1996 (loan relationships).

(12)Without prejudice to the generality of section 80(5) of the Finance Act 1996 (matters to be brought into account only under that Chapter), this paragraph does not have effect for determining how any manufactured interest falls to be treated for any purpose in relation to a company in relation to which that interest falls to be treated in accordance with section 97 of that Act.

(13)For the purposes of this paragraph references to the gross amount of any interest or payment are references to the amount of the interest or payment before the making of any deduction of income tax that is required to be deducted from it on its being paid or made.

Manufactured interest on gilt-edged securities etc.U.K.

3A(1)Where any manufactured interest is representative of interest on securities to which this paragraph applies—

(a)paragraph 3(2) above shall not require any deduction of tax to be made on the payment of that manufactured interest; and

(b)without prejudice to any other liability of his to income tax in respect of the manufactured interest, the recipient shall not by virtue of paragraph 3(5) above be liable to account for any income tax in respect of that manufactured interest.

(2)This paragraph applies to—

(a)gilt-edged securities (within the meaning of section 51A); and

(b)securities not falling within paragraph (a) above on which the interest is payable without deduction of tax.”

(2)In section 737C(8) of that Act, for paragraph (a) (amount of deemed manufactured interest) there shall be substituted the following paragraph—

“(a)the amount which by virtue of section 737A(5) is taken to be the gross amount of the deemed manufactured payment for the purposes of paragraph 3 of Schedule 23A shall be taken to be the gross amount of the deemed manufactured interest for the purposes of this section;”and in paragraph (b) for “paragraph 3 of Schedule 23A” there shall be substituted “ that paragraph ”.

Repeal of paragraph 5 of Schedule 23AU.K.

12U.K.Paragraph 5 of Schedule 23A to that Act (dividends and interest passing through the market) shall cease to have effect.

Consequential amendments in Schedule 23AU.K.

13(1)In sub-paragraph (1) of paragraph 8 of Schedule 23A to that Act (power to modify provisions of Schedule), for “paragraphs 2 to 5 above” there shall be substituted “ paragraphs 2 to 4 above ”.U.K.

(2)In sub-paragraph (2) of that paragraph (powers with respect to accounts and records, returns, accounting for tax etc.), for the words after paragraph (d) there shall be substituted—

“by persons by or to whom manufactured dividends, manufactured interest or manufactured overseas dividends are paid.”

(3)After that sub-paragraph there shall be inserted the following sub-paragraph—

“(2A)Dividend manufacturing regulations with respect to any liability to account for tax may contain any of the following, that is to say—

(a)provision for computing the amounts to be accounted for;

(b)provision, in relation to the determination of the amount to be paid on any occasion, for setting other amounts against the amounts to be accounted for;

(c)provision as to the liabilities against which amounts accounted for are to be, or are not to be, set for the purposes of income tax or corporation tax;

(d)provision modifying, or applying (with or without modifications), any enactments contained in the Tax Acts.”

Amendments of Taxes Management Act 1970U.K.

14(1)Section 21 of the M57Taxes Management Act 1970 (information about a market maker’s business) shall be amended as follows.U.K.

(2)For subsection (1) there shall be substituted the following subsection—

“(1)The Board may exercise the powers conferred by this section as respects, and in connection with, any business consisting in or involving dealings in securities; and for the purposes of this section it shall be immaterial whether those dealings are or, as the case may be, were—

(a)on behalf of persons other than the person carrying on the business;

(b)by that person on his own behalf; or

(c)a mixture of the two.”

(3)In subsection (2)—

(a)for the word “transactions”, in the first place where it occurs, there shall be substituted “ securities transactions ”; and

(b)for “market maker” there shall be substituted “ person ”.

(4)In subsection (3), for “transactions in the course of” there shall be substituted “ securities transactions in the course of any business of a person other than the broker which is ”.

(5)For subsection (4) there shall be substituted the following subsections—

“(4)Where a person (“the recipient”) who is not a broker has directly or indirectly received from another person any payment which—

(a)is made by that other person in the course of a business within subsection (1) above, and

(b)is a payment treated by that other person as made in respect of interest on securities,

the Board may by notice in writing require the recipient to state, within a time specified in the notice, whether the amount received is in whole or in part received on behalf of, or for payment on to, a third person and (if it is) to furnish the name and address of that third person.

(4A)Where a person (“the payer”) has directly or indirectly paid to another person any sum which—

(a)constitutes a receipt by that other person in the course of a business within subsection (1) above, and

(b)is a receipt treated by that other person as accruing in respect of interest on securities,

the Board may by notice in writing require the payer to state, within a time specified in the notice, whether the amount paid is in whole or in part received from, or paid on account of, a third person and (if it is) to furnish the name and address of that third person.”

(6)In subsection (5)—

(a)for “whether brokers or market makers or not” there shall be substituted “ at all ”; and

(b)for “transactions” there shall be substituted “ securities transactions ”.

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

“(5A)Where it appears to the Board that a person may have incurred a liability to pay or account for tax under Schedule 23A to the principal Act (manufactured payments), the Board may by notice served on that person require him, within such period (not being less than 28 days) as may be specified in the notice, to provide the Board with information which—

(a)is available to that person; and

(b)is or may be relevant to whether that person has incurred such a liability, or to the extent of such a liability.”

(8)For subsection (7) there shall be substituted the following subsection—

“(7)In this section—

• “broker” means any person who is a member of a recognised investment exchange, within the meaning of the M58Financial Services Act 1986;

• “interest” includes dividends;

• “securities” includes shares and stock; and

• “securities transaction” means—

  (a)

  any transaction in securities;

  (b)

  any transaction under which a payment which is representative of any interest on a security has been, is to be or may be made; or

  (c)

  the making or receipt of such a payment.”

Repeal of powers to modify information provisionsU.K.

15U.K.Paragraphs 7 and 9 of Schedule 18 to the M59Finance Act 1986 (which contain powers to modify section 21 of the M60Taxes Management Act 1970) shall cease to have effect.

CommencementU.K.

16(1)Subject to the following provisions of this paragraph, this Part of this Schedule has effect in relation to any payment of a manufactured dividend or manufactured interest which is a payment made on or after such day as the Treasury may by order made by statutory instrument appoint.U.K.

(2)Paragraph 14 above has effect (instead of in accordance with sub-paragraph (1) above but subject to sub-paragraph (3) below) for the purpose of conferring powers for obtaining information about—

(a)transactions entered into on or after such day as the Treasury may by order made by statutory instrument appoint; and

(b)payments made on or after that day (whether under such transactions or under transactions entered into before that day).

(3)Nothing in this Part of this Schedule shall affect the exercise, at any time on or after the day appointed under sub-paragraph (2) above, of the powers conferred apart from this Schedule by—

(a)section 21 of the M61Taxes Management Act 1970, or by any regulations modifying that section, or

(b)section 737(8) of the Taxes Act 1988,

for obtaining information about transactions entered into, or payments made, before that day.

Section 80.

F30SCHEDULE 11U.K. Futures and options: taxation of guaranteed returns

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

Section 82.

SCHEDULE 12U.K. Leasing arrangements: finance leases and loans

Part IU.K. Leasing arrangements where any of the return on investment is in capital form

Purpose of this Part of this ScheduleU.K.

1(1)This Part of this Schedule is concerned with arrangements—U.K.

(a)which involve the lease of an asset;

(b)which are or have been entered into by companies or other persons;

(c)which are of such a kind as, F31. . . falls F31. . . to be treated in accordance with [F32generally accepted accounting practice] as finance leases or loans; and

(d)whose effect is that some or all of the return on investment in respect of the finance lease or loan—

(i)is or may be in the form of a sum which is not rent; and

(ii)would not, apart from this Schedule, be wholly brought into account for tax purposes as rent from the lease.

(2)The principal purpose of this Part of this Schedule is, in the case of any such arrangements,—

(a)to charge any person entitled to the lessor’s interest under the lease of the asset to tax from time to time on amounts of income determined by reference to those which fall for accounting purposes to be treated in accordance with [F33generally accepted accounting practice] as the income return, on and after 26th November 1996, on investment in respect of the finance lease or loan (taking into account the substance of the matter as a whole, including in particular the state of affairs as between connected persons, or within a group of companies, as reflected or falling to be reflected in accounts of any of those persons or in consolidated group accounts);

(b)where the sum mentioned in sub-paragraph (1)(d) above falls due, to recover by reference to that sum the whole or any part of any reliefs, allowances or deductions which are or have been allowed or made in respect of capital expenditure incurred in respect of the leased asset.