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Finance Act 1966

Status:

This is the original version (as it was originally enacted).

Part ICustoms and Excise

Reliefs, drawback, exemptions, etc.

1Relief from duty on imported goods

(1)Subject to subsection (3) of this section, the Commissioners shall have power to give relief in accordance with subsection (2) thereof from any duty under section 1 of the Import Duties Act 1958 or under the Customs Duties (Dumping and Subsidies) Act 1957 chargeable in respect of goods of any description imported or proposed to be imported into the United Kingdom (hereafter in this section referred to as " the imported articles ") if—

(a)the Board of Trade have notified the Commissioners that in the opinion of the Board the granting of the relief would conduce to the exportation of other goods and, subject to such, if any, limitations or conditions as the Board see fit to indicate, would be expedient in the national interest; and

(b)the Commissioners are satisfied as to those other goods being goods constituting, or incorporating, or manufactured or produced from, equivalent articles;

and, in deciding whether or not to give a notification to the Commissioners under paragraph (a) of this subsection in respect of any imported articles, the Board of Trade shall have regard to the interests of those producing in the United Kingdom goods comparable with those articles.

(2)Relief under subsection (1) of this section from any duty chargeable in respect of any imported articles—

(a)may be given, as appears to the Commissioners to be appropriate in the circumstances of the case—

(i)either in respect of those imported articles as a whole, or in respect of any one or more components thereof; and

(ii)either by remission or repayment (in whole or in part) of the amount of that duty or by payment of an amount equal to the drawback which it appears to the Commissioners would be payable apart from anything in this section if such goods as appear to the Commissioners to be appropriate in the circumstances of the case were to be exported; and

(b)shall be subject to such conditions as the Commissioners see fit to impose—

(i)in order to give effect to any limitations or conditions such as are referred to in subsection (1)(a) of this section; or

(ii)for the protection of the revenue ; or

(iii)for securing the exportation of goods constituting, or incorporating, or manufactured or produced from, equivalent articles.

(3)Relief under subsection (1) of this section from any duty such as is mentioned in that subsection shall not be given in respect of, or in respect of any component of, any imported articles by reference to any equivalent articles unless, or except to the extent that, the Commissioners are satisfied that—

(a)relief otherwise than under the said subsection (1) from any such duty as aforesaid chargeable in respect of the equivalent articles themselves, or in respect of goods from which those equivalent articles were manufactured or produced, has not already been given in respect of, or, as the case may be, in respect of the corresponding component of, those equivalent articles or goods; and

(b)relief under the said subsection (1) in respect of, or, as the case may be, in respect of the corresponding component of, other imported articles has not already been given by reference to those equivalent articles ; and

(c)relief from the duty chargeable in respect of the imported articles has not already been given, whether in respect of those articles as a whole or in respect of any component thereof;

and no relief from any such duty as aforesaid, whether by way of drawback or otherwise, available on the exportation of any goods shall be given in respect of the goods exported, or in respect of any goods incorporated in the goods exported, or in respect of any goods from which the goods exported were manufactured or produced, unless, or except to the extent that, the Commissioners are satisfied that—

(i)relief from that duty has not already been given under the said subsection (1) or otherwise ; and

(ii)relief under the said subsection (1) has not been given in respect of, or in respect of any component of, any other goods by reference to equivalent articles constituting, or incorporated in, or used for the manufacture or production of, the goods in respect of which the relief is sought.

(4)In the foregoing provisions of this section—

(a)any reference to a component of any goods or articles shall be construed as a reference to, and to any combination of, any of the following, namely, any component, any ingredient, and any constituent part, of those goods or articles ;

(b)the expression " equivalent articles " means goods of any description which, in the opinion of the Commissioners (having regard to such matters, and in particular to such of the following matters, namely, the description, quantity, quality, value and function of those goods and the imported articles respectively, as appear to the Commissioners to be relevant in the particular circumstances) are sufficiently similar to the imported articles, or to goods which could be manufactured or produced from the imported articles, to be reasonably regarded for the purposes of relief under subsection (1) of this section as interchangeable with those articles or, as the case may be, with goods manufactured or produced from them.

(5)Subsections (1) to (4) of this section shall be construed as if contained in the Import Duties Act 1958 ; and section 10 of that Act (which relates to false statements or documents in connection with applications for, and to forfeiture for failure to comply with conditions as to, relief) shall apply in relation to relief under subsection (1) of this section as it applies in relation to relief under section 5(1) or section 6 of that Act.

(6)Section 2(1) of the Finance Act 1965 (which makes provision for the purposes of section 7 of the Import Duties Act 1958 for goods brought to a registered shipbuilding yard to be deemed to be exported) shall have effect as if any reference therein to the said section 7 included a reference to subsections (1) to (4) of this section.

(7)Without prejudice to section 15(2) of the Import Duties Act 1958 and its application by virtue of subsection (5) of this section, for the purposes of any reference in subsections (1) to (4) of this section or in the said Act of 1958 to goods incorporating, or produced or manufactured from, any articles, any container in which goods are exported, being a container—

(a)which is provided by the supplier of the exported goods and is not required to be returned to him ; and

(b)for which, if it were returned to him, that supplier would give no credit and would discharge no contingent liability,

shall be treated as forming part of the exported goods.

2Reliefs for shipbuilders in respect of certain duties

(1)The provisions of this section shall have effect for the purpose of affording relief in respect of duties of customs and excise chargeable on hydrocarbon oils, vehicle excise duty (including such duty chargeable in Northern Ireland) and purchase tax incurred in connection with the construction and fitting out of certain vessels and other floating structures.

(2)If, on an application made in accordance with directions from time to time given by the Commissioners for the purposes of this section, it is shown to the satisfaction of the Commissioners that a vessel or other structure to which this section applies, having been constructed in the United Kingdom by the applicant pursuant to a contract (whenever made) under which it was to become the property of some other person, was delivered by him pursuant to that contract after the coming into force of this section, the applicant shall, subject to subsections (7) to (9) below, be entitled to receive from the Commissioners a payment of an amount determined in accordance with the two next following subsections.

(3)Subject to the next following subsection, the said amount shall be such percentage as the Treasury may by order prescribe of the price payable under the contract in question for the said vessel or structure and all fittings and other equipment supplied by the applicant therewith, or, if that price appears to the Commissioners to be greater than the open market value of the vessel or structure and its said fittings and equipment as determined in accordance with Part I of Schedule 1 to this Act and the Commissioners so decide, the prescribed percentage of that value; and an order under this subsection may prescribe different percentages in relation to different descriptions of vessels or structures. Any price which is expressed in a foreign currency shall be treated for the purposes of this subsection as equivalent to a sum calculated in such manner as the Commissioners may direct.

(4)The price or value referred to in the last foregoing subsection shall, in the circumstances specified in Part II of the said Schedule 1, be treated for the purposes of that subsection as reduced as mentioned in that Part.

(5)The vessels and other structures to which this section applies are as follows—

(a)any ship, within the meaning of the Merchant Shipping Acts 1894 to 1965, the gross tonnage of which, ascertained in accordance with those Acts, is not less than eighty tons; and

(b)any other vessel, or other structure capable of floating on the sea, which is of a description specified in that behalf by an order of the Treasury, and in respect of which any conditions so specified are satisfied:

Provided that the Treasury may by order exclude from the operation of this section any ship, or any ship of a specified description, in the case of which less than a specified percentage of the cost of its construction, calculated in accordance with the order, was attributable to United Kingdom expenditure as defined in the order.

(6)References in this section to the construction of vessels and other structures do not include references to their reconstruction, refitting or repair.

(7)If, within one month of the coming into force of this section, any person shows to the satisfaction of the Commissioners—

(a)that a vessel or other structure has been, or is to be, delivered to him pursuant to a contract made before 23rd June 1966, and has been, or is to be, exported by him pursuant to another such contract, and

(b)that, by reason of its exportation pursuant to the last-mentioned contract, he is or may become entitled to payment of a rebate under section 7 of the Finance (No. 2) Act 1964 (export rebates), no payment shall be made under this section in respect of the said vessel or structure unless that person either by notice in writing to the Commissioners waives any right to the rebate in question or fails for any reason to become entitled thereto.

(8)No person shall be entitled to a rebate under the said section 7 in respect of any vessel or other structure in respect of which a payment under this section is, or could if applied for have been, made to any other person; and a person who, but for this subsection, would be entitled as respects any vessel or other structure to both such a rebate and such a payment may receive either, as he elects, but not both.

(9)Where in the case of any vessel or structure the whole or any part of the price payable as mentioned in subsection (3) above is not received in accordance with the contract in question by the applicant for a payment under this section, the Commissioners if they think fit may require the applicant to repay the whole or any part of any payment made to him on the application or, as the case may be, may withhold from him the whole or any part of any payment which would otherwise fall to be so made.

(10)It shall be the duty of any person to or by whom a payment under this section has been made or applied for to inform the Commissioners of any event which would entitle them to exercise the powers conferred by the last foregoing subsection, and any person who fails to comply with this subsection shall be liable to a penalty of one hundred pounds.

(11)The provisions of Part III of Schedule 1 to this Act shall have effect for the purposes of this section.

(12)For the avoidance of doubt it is hereby declared that the allowances referred to in section 9 of the Finance Act 1961 do not include payments under this section.

(13)Payments by the Commissioners under this section shall be made out of the sums received by them on account of duties of customs and excise and purchase tax ; and—

(a)notwithstanding anything in section 5(4) of the Vehicles (Excise) Act 1962 (which requires duties levied under that Act to be paid into the Exchequer) or in any Order in Council under that section, the Treasury may give directions for the payment to the Commissioners, at such times and in such manner as the Treasury may determine, out of the duties levied under that Act of such sums as the Treasury think fit having regard to the extent to which payments under this section are designed to afford relief in respect of such duties;

(b)any sums so paid shall be treated for the purposes of section 11 of the Act of 1952 (disposal of duties of customs and excise) as money received by the Commissioners on account of duties of customs and excise.

(14)Any order under the foregoing provisions of this section may be varied or revoked by a subsequent order, and shall be made by statutory instrument subject to annulment in pursuance of a resolution of the House of Commons.

(15)This section shall come into force on such day as may be appointed by the Treasury by an order under this subsection made by statutory instrument and laid before Parliament after being made, but shall, in its application to any vessel or other structure by virtue of an order under subsection (5) above, have effect as if it had not come into force until such later day, if any, as may be specified in that order.

3Drawback on tobacco

Section 183(1) of the Act of 1952 (drawback on tobacco) shall be amended as follows:—

(a)in paragraph (a) (drawback on tobacco other than tobacco stalks and tobacco refuse), there shall be added at the end of sub-paragraph (ii)

or for sale at a place approved by the Commissioners for the purpose to persons leaving the United Kingdom by air for destinations outside the United Kingdom, the Republic of Ireland, the Channel Islands and the Isle of Man; and

(b)for all the words after paragraph (d) there shall be substituted

but, in the case of tobacco stalks or tobacco refuse, only if the deposit, warehousing or exportation was by a tobacco manufacturer.

4Exemption of E.F.T.A. goods from duties on hop oil and hop extracts

As from 1st September 1966, goods of Convention area origin within the meaning of the European Free Trade Association Act 1960 shall be exempted from any duty of customs under section 3(1)(b) or (c) of the Finance Act 1957 (which relate to duties of customs on hop oil or, as the case may be, on any extract, essence or other similar preparation made from hops, except hop oil).

5Removal of restriction on delivery of imported vodka for home use

As from 1st September 1966, section 109(1) of the Act of 1952 (which provides that no spirits shall be delivered for home use unless they have been warehoused for a period of at least three years) shall not apply to imported vodka consisting of spirits which have had a flavour communicated thereto or an ingredient or material mixed therewith.

6Rebate of duty on heavy oils

For heavy oils delivered for home use after six o'clock in the evening of 31st August 1966, the rate at which rebate of the customs or excise duty on hydrocarbon oils is allowed under section 199 of the Act of 1952 shall in all cases be a rate twopence a gallon less than the rate at which the duty in question is for the time being chargeable.

7Eligibility of imported goods for rates of revenue duties applicable to goods of Republic of Ireland

(1)Subsections (1) to (3) of section 12 of the Import Duties Act 1958 (which relate to the determination for the purposes of that Act of the country of origin of imported goods) shall have effect as if references therein to that Act included references to any enactment passed, or instrument made, after the passing of this Act which specifies a rate at which any revenue duty is to be charged in respect of goods of the Republic of Ireland consigned to the United Kingdom from that country.

(2)In the foregoing subsection " revenue duty " means any customs duty other than one chargeable under the said Act of 1958, the Customs Duties (Dumping and Subsidies) Act 1957 or section 3 of the Finance (No. 2) Act 1964.

Vehicles excise duty

8Unladen weight of vehicles: special bodies

(1)This section has effect as respects the application of Schedule 6 to the Vehicles (Excise) Act 1962 (computation of the unladen weight of vehicles) to a vehicle having a body constructed or adapted for the purpose of being lifted on or off the vehicle with goods or burden contained therein which is from time to time actually used for that purpose in the ordinary course of business.

(2)The unladen weight of the vehicle shall, for the purposes of the said Act, be taken exclusive of the weight of any such body and, where alternative bodies are used, any such body shall be disregarded for the purposes of the said Schedule 6.

(3)If any question arises whether a body is from time to time actually used for the purpose mentioned in subsection (1) above in the ordinary course of business, the body shall be deemed not to be so used until the contrary is shown.

(4)This section shall come into force on 1st September 1966.

(5)The holder in respect of any vehicle to which this section applies of a licence under the said Act of 1962 issued before the coming into force of this section shall, on an application made within twelve months of that time to the council with which the vehicle is for the time being registered, be entitled to a refund of duty, in respect of any period after that time during which the licence has been or (on the assumption that it is not surrendered) will be current, of an amount equal to one-twelfth for each complete month in that period of the difference between—

(a)the annual rate of duty chargeable in respect of the vehicle at the time the licence was taken out, and

(b)the annual rate appropriate to the vehicle after the coming into force of this section.

(6)On the surrender after the coming into force of this section of a licence issued before that time in respect of any such vehicle, the rebate of duty payable under section 9 of the said Act of 1962 shall be computed as if the rate of duty on the licence had been the rate appropriate to the vehicle after the coming into force of this section.

Export rebates

9Restriction on export rebates for goods consigned to Convention area

(1)No person shall be entitled to rebate under section 7 of the Finance (No. 2) Act 1964 (export rebates) in respect of goods exported from the United Kingdom if a Convention rate of duty (as defined in the European Free Trade Association Act 1960) is applied to those goods after being so exported, and the Commissioners may require an applicant for rebate under that section in respect of any goods to satisfy them that a Convention rate of duty has not been, and will not be, applied to the goods at any time after the exportation.

(2)A person who has received a rebate for which he is or becomes disentitled in consequence of this section shall be liable to repay the amount of that rebate to the Commissioners, and shall be under a duty to inform the Commissioners of any event giving rise to such a liability. A person failing to give the Commissioners any information which it is his duty to give under this subsection shall be liable to a penalty of one hundred pounds (but without prejudice to any other penalty which may be imposed for making an untrue declaration or otherwise).

(3)The Commissioners may under subsection (1) above require an applicant for rebate to give them a declaration in writing made to the best of his knowledge and belief and in such form and manner as the Commissioners may direct that a Convention rate of duty has not been, and will not be, applied to the goods at any time after the exportation, and may if they think fit accept that declaration without further proof or verification, but without prejudice to enforcement of the liability under subsection (2) above.

(4)Section 9(1) of the Finance (No. 2) Act 1964 (powers of obtaining information to determine whether a rebate is repayable under section 8 of that Act) shall apply as if references to section 8 of that Act included references to subsection (2) of this section.

(5)References in this section to the application of a Convention rate of duty are references to the application in any part of the Convention area (other than the United Kingdom) of a Convention rate of duty where that results in the payment of less duty than would be payable if the goods were not of Convention area origin.

(6)Sections 10 and 11 of the European Free Trade Association Act 1960 as for the time being in force shall apply for the interpretation of this section.

(7)Subsection (1) of this section shall not apply to rebate payable by reference to the exportation of goods before 1st January 1967.

Hover vehicles and pipe-lines

10Customs procedures: hover vehicles and related matters

(1)Parts II, X, XI and XII of the Act of 1952 (general and supplemental provisions) shall apply as if references to ships or vessels included references to hover vehicles, and all other provisions of the customs and excise Acts shall apply as if references (however expressed) to goods or passengers carried in or moved by ships or vessels included references to goods or passengers carried in or moved by hover vehicles; and in all the provisions of the customs and excise Acts " landed", " loaded ", " shipped ", " shipped as stores ", " transhipment ", " voyage ", " waterborne ", " master " and cognate expressions shall be construed accordingly.

(2)The provisions of Schedule 2 to this Act shall also have effect with respect to the application of the Act of 1952 to hover vehicles.

(3)The Commissioners may by regulations impose conditions and restrictions as respects the movement of hover vehicles and the carriage of goods by hover vehicles, and in particular—

(a)may prescribe the procedure to be followed by hover vehicles proceeding to or from a port or any customs airport or customs station, and authorise the proper officer to give directions as to their routes, and

(b)may make provision for cases where by reason of accident,

or in any other circumstance, it is impracticable to comply with any conditions or restrictions imposed or directions given as respects hover vehicles,

and if any person contravenes or fails to comply with any regulations made under this subsection, or with any direction given by the Commissioners or the proper officer in pursuance of any such regulations, he shall be liable to a penalty of one hundred pounds and any goods in respect of which the offence was committed shall be liable to forfeiture.

(4)Sections 14(1) and 17(1) of the Act of 1952 (power to approve wharves and transit sheds in any port) may be applied to places not in a port and—

(a)Part II of the said Act shall apply in relation to any place approved under the said section 14 or 17 which is not in a port as if it were in a port, and

(b)section 298 of the said Act (power to search persons) shall apply to any person in, entering or leaving any such place, and

(c)subsection (3) (a) above shall apply to hover vehicles proceeding to or from any such place as if it were a port.

(5)References in the customs and excise Acts to goods imported or exported by land, or conveyed into or out of Northern Ireland by land, include references to goods imported, exported or conveyed across any part of the boundary of Northern Ireland, and it is hereby declared that in those Acts references to vehicles include references to hover vehicles proceeding over land or water or partly over land and partly over water.

(6)Any power of making regulations or other instruments relating to the importation or exportation of goods conferred by the customs and excise Acts may be exercised so as to make provision for the importation or exportation of goods by hover vehicles which is different from the provision made for the importation or exportation of goods by other means.

(7)Goods to which section 47 of the said Act applies (drawback goods, etc., and goods subject to restrictions or controls on export) shall only be exported in a hover vehicle if it is of a class or description for the time being approved by the Commissioners and subject to such conditions and restrictions as they may impose, and—

(a)a person contravening or failing to comply with this subsection, or any condition or restriction imposed under this subsection, shall be liable to a penalty of three times the value of the goods or one hundred pounds, whichever is the greater,

(b)any goods shipped or entered contrary to this subsection shall be liable to forfeiture.

(8)In section 29(1) of the said Act (entry by bill of sight of goods imported by sea or air) the words " by sea or air " shall cease to have effect, and in section 284(2) of that Act (justices' jurisdiction to try offences committed on the water or in the air outside their area) the words " on the water or in the air " shall cease to have effect.

(9)In this section and its Schedule " hover vehicle " means a vehicle designed to be supported on a cushion of air.

11Pipe-lines

(1)Goods shall not be imported or exported by means of a pipe-line that is not for the time being approved by the Commissioners for the purposes of this section, and uncleared goods shall not be moved by means of a pipe-line that is not for the time being so approved.

(2)All goods imported by means of a pipe-line and chargeable with a duty of customs shall be entered for warehousing, and in the customs and excise Acts the expression " the importer " in relation to goods imported by means of a pipe-line shall include the owner of the pipe-line.

(3)For the purposes of the customs and excise Acts—

(a)goods imported by means of a pipe-line shall be treated as imported at the time when they are brought within the limits of a port or brought across the boundary into Northern Ireland, and

(b)goods exported by means of a pipe-line shall be treated as exported at the time when they are charged into that pipe-line for exportation.

(4)In the customs and excise Acts the expressions " shipping " and " loading " and cognate expressions, where used in relation to importation or exportation shall include, in relation to importation or exportation by means of a pipe-line, the conveyance of goods by means of the pipe-line and the charging and discharging of goods into and from the pipe-line, but subject to any necessary modifications; and any power of making regulations or other instruments relating to the importation or exportation of goods conferred by those Acts may be exercised so as to make provision for the importation or exportation of goods by those means which is different from the provision made for the importation or exportation of goods by other means.

(5)For goods exported by means of a pipe-line the period for delivery of a specification of the goods under section 49 of the Act of 1952 shall be six days from the time when the goods are charged into the pipe-line for exportation or such longer period as the Commissioners may direct.

(6)The Commissioners may give their approval under subsection (1) above for such period and subject to such conditions as they think fit and may at any time for reasonable cause—

(a)vary the terms of their approval, and

(b)(provided that they have given to the owner of the pipeline not less than three months' written notice of their intention so to do) revoke their approval. Section 49 of the Pipe-lines Act 1962 shall apply to a notice required by this subsection to be served on the owner of a pipe-line as it applies to a document required by that Act to be so served.

(7)A person who—

(a)contravenes subsection (1) above, or contravenes or fails to comply with a condition imposed by the Commissioners under the last foregoing subsection, or

(b)except with the authority of the proper officer or for just and sufficient cause, obtains access to goods which are in, or in course of conveyance by, an approved pipe-line,

shall be liable to a penalty of five hundred pounds or to imprisonment for a term not exceeding two years or to both and may be detained; and any goods in relation to which the offence was committed may be forfeited.

(8)Where goods of any of the following descriptions—

(a)goods which are chargeable with a duty which has not been paid,

(b)goods on which duty has been repaid or remitted in whole or in part, and

(c)goods on which drawback has been paid,

are moved by pipe-line, or notified to the proper officer as being goods to be moved by pipe-line, and are at any time thereafter found to be missing or deficient, then, unless it is shown to their satisfaction that the absence or deficiency can be accounted for by natural waste or other legitimate cause, the Commissioners may require the owner of the pipe-line or the proprietor of the goods to pay immediately in respect of the missing goods, or in respect of the whole or any part of the deficiency as they see fit, the amount of the duty unpaid or repaid thereon or, as the case may be, an amount equal to the drawback paid thereon; and any person who, on the written demand of an officer, refuses to pay any sum which he is required to pay under this subsection shall in addition be liable to a penalty of double that sum. For the purposes of this subsection any absence or deficiency in the case of goods moved by a pipe-line used for the importation or exportation of goods shall be deemed to have taken place within the United Kingdom unless the contrary is shown; and the provisions of this subsection shall have effect without prejudice to any penalty or forfeiture incurred under any other provision of this section or elsewhere in the customs and excise Acts.

(9)Section 82(3) of the Act of 1952 (protection for Commissioners and their officers from claims for loss or damage to goods in a warehouse, or for unlawful removal from a warehouse) shall have effect so as to protect the Commissioners and their officers, save in corresponding circumstances, from claims for loss or damage to goods in a pipe-line or for unlawful removal of goods from a pipe-line, references to a pipe-line, to goods in a pipeline and to the owner of the pipe-line being substituted for references respectively to a warehouse, the warehoused goods and to the occupier of the warehouse.

(10)In this section—

  • " pipe-line " has the meaning assigned thereto by section 65 of the Pipe-lines Act 1962,

  • " owner ", in relation to a pipe-line, means (except in the case of a pipe-line vested in the Crown which in pursuance of arrangements in that behalf is operated by another) the person in whom the line is vested and, in the said excepted case, means the person operating the line, and

  • " uncleared goods " means imported goods, whether or not chargeable with a duty of customs, which have not been cleared from customs charge, and in particular goods which are or are to be moved under section 22 of the Act of 1952, and dutiable goods moved from warehouse without payment of duty.

(11)In the application of this section to Northern Ireland references to the Pipe-lines Act 1962 shall have effect as if that Act extended to Northern Ireland.

Duties relating to betting and gaming

12General betting duty

(1)Subject to the provisions of this section, on any bet made on or after 24th October 1966 which—

(a)is made with a bookmaker in Great Britain otherwise than by way of pool betting or coupon betting ; or

(b)is made by way of sponsored pool betting or is other wise made by means of facilities provided by the Horserace Totalisator Board ; or

(c)is made on any event on a track by means of a totalisator on that track and on the day on which that event takes place, being a track which is, or which the Commissioners see fit to treat for the purposes of this paragraph as if it were, a licensed track,

there shall be charged a duty of excise to be known as the general betting duty.

(2)The general betting duty in respect of any bet—

(a)without prejudice to any regulations made under paragraph 1 of Schedule 3 to this Act, shall be due on the making of the bet;

(b)shall be of an amount equal to two and a half per cent. of the amount staked ; and

(c)shall be paid—

(i)in the case of a bet with a bookmaker, and without prejudice to subsection (3) of this section, by the bookmaker;

(ii)in the case of a bet made as mentioned in subsection (1)(b) of this section, by the Horserace Totalisator Board or other person providing the facilities by means of which the bet is made ;

(iii)in the case of such a bet made by means of a totalisator as is mentioned in subsection (1)(c) of this section, by the operator, that is to say, the person who, as principal, operates the totalisator.

(3)The general betting duty chargeable on any bet made with a bookmaker shall be recoverable jointly and severally from all or any of the following persons, namely—

(a)that bookmaker;

(b)the holder of the bookmaker's permit or betting office licence relating to the business in the course of which, or the premises at which, the bet was made;

(c)any person responsible for the management of that business or those premises;

(d)where the bookmaker is a company, any director of that company.

(4)For the purposes of the general betting duty, where a person bets on more than one contingency on the terms that, in the event of his bet being successful in respect of one contingency, his stake on the bet, or his winnings in respect of that contingency, or both, are to provide the stake in respect of another contingency, then, unless he makes his bet on both or all of those contingencies at the same time and on the terms that both his original stake and the whole of his winnings in respect of any of those contingencies are to be the stake in respect of any other contingency on which the bet is made—

(a)he shall be treated as making a separate bet on each respectively of those contingencies and as staking on each of those separate bets the amount respectively provided for by the terms of the original bet;

(b)any of those separate bets which depends on the out come of another or others of them shall be treated as made if and when the conditions on which it depends are satisfied.

(5)The aggregate amount paid by or debited to the account of the bettor for or on account of or in connection with any bet chargeable with the general betting duty shall be treated for the purposes of that duty as his stake on the bet, notwithstanding that his winnings (if any) are to be computed on part only of that amount, or that part of it is not to be returned to him in the event of his winning, and no deduction shall be made for other benefits secured by the bettor in paying that amount, or for the expenses of any person on account of the duty or otherwise, or for any other matter.

(6)The pool betting duty shall not be chargeable on any bet made as mentioned in subsection (1)(c) of this section on or after 24th October 1966, and accordingly as from that date—

(a)except in relation to a bet made before that date, section 1(1) of the Betting Duties Act 1963 (which charges the pool betting duty) shall have effect as if for the words " other than sponsored pool betting " there were substituted the words

which are not chargeable with the general betting duty; and

(b)paragraph 4(a)(i) of Schedule 5 to the Betting, Gaming and Lotteries Act 1963 (which relates to the disposal of amounts staked by means of a totalisator on a dog racecourse) for the words " pool betting duty " there shall be substituted the words

general betting duty;

and as from that date bookmakers' licence duty shall cease to be charged.

13Gaming licence duty

(1)There shall be charged a duty of excise on a licence (to be known as a gaming licence) authorising the use of premises specified in the licence for the purpose of gaming—

(a)by way of bingo only ; or

(b)by way of bingo or any other game to which this section for the time being applies ;

and, subject to subsection (4) of this section, on and after 1st October 1966 no premises situated in Great Britain or within the limits of the territorial waters of the United Kingdom adjacent to Great Britain shall be used for the purpose of gaming by way of any game to which this section for the time being applies unless a provider of the premises is the holder of the appropriate gaming licence in respect of those premises which is for the time being in force.

(2)Subject to paragraph 8 of Schedule 3 to this Act, the amount of the duty under this section on a gaming licence in respect of any premises shall be determined in accordance with the following Table:—

Table

Description of premisesAmount of duty
On licence for bingo onlyOn licence for all games
££

1. Premises other than—

(a) premises which for rating purposes constitute or are comprised in a hereditament of a rateable value exceeding £1,000;

(b) premises consisting of or comprised in a vessel.

100500

2. Premises—

(a) which for rating purposes constitute or are comprised in a hereditament of a rateable value exceeding £1,000 but not exceeding £3,000; or

(b) which consist of or are comprised in a vessel.

1,0005,000
3. Premises which for rating purposes constitute or are comprised in a hereditament of a rateable value exceeding £3,000.1,00050,000

(3)Subject to paragraphs 12 and 13 of Schedule 3 to this Act, a gaming licence shall expire at the end of 30th September next after the date when it is granted.

(4)A gaming licence shall not be required—

(a)for any gaming carried on both in a private dwelling and on a domestic occasion ;

(b)for any gaming carried on in such circumstances that,

by virtue of section 48 or 49 of the Betting, Gaming and Lotteries Act 1963, section 32 of that Act does not apply thereto;

(c)for gaming by way of bingo in such circumstances that section 37 of that Act applies thereto ;

(d)for gaming by way of bingo carried on as an activity of a club where—

(i)the subscription for membership of the club does not exceed one pound a year ; and

(ii)not more than one payment by way of a charge for admission to any premises constituting or including the place at which the gaming is carried on falls to be made in order to enable a person to take part in the gaming, and that payment does not exceed sixpence; and

(iii)no other payment is required to be or have been made, and no obligation to make any other payment is required to be incurred, in order to enable a person to take part in the gaming.

(5)Without prejudice to subsections (6) and (7) of this section, the games in addition to bingo to which this section applies are baccarat, big six, blackjack, boule, chemin de fer, chuck-a-luck, craps, crown and anchor, faro, faro bank, hazard, poker dice, pontoon, roulette, trente et quarante, vingt-et-un, and wheel of fortune.

(6)The Treasury may by order made by statutory instrument add to the games mentioned in subsection (5) of this section any game not for the time being mentioned therein if it appears to the Treasury proper so to do for the protection of the revenue, having regard to the character of the game and the circumstances in which it is played; but a statutory instrument containing an order under this subsection shall be laid before the Commons House of Parliament after being made, and the order shall cease to have effect at the end of twenty-eight days after the day on which it is made (but without prejudice to anything previously done under the order or to the making of a new order) unless at some time before the end of those twenty-eight days the order is approved by resolution of that House ; and, in reckoning for the purposes of this subsection any period of twenty-eight days, no account shall be taken of any time during which Parliament is dissolved or prorogued or during which both Houses are adjourned for more than four days.

(7)Any reference in this section or in any order under subsection (6) thereof to a particular game shall be taken to include a reference to any game (by whatever name called) which is essentially similar to that game; and in proceedings relating to the gaming licence duty under the excise Acts an averment in any process that a particular game is essentially similar to another particular game shall, until the contrary is proved, be sufficient evidence that it is so.

14Gaming machine licence duty

(1)There shall be charged a duty of excise on a licence (to be known as a gaming machine licence) authorising the person to whom it is granted to cause or permit a gaming machine of the type appropriate to the rate of duty charged to be made available for play on premises specified in the licence; and, subject to subsection (2) of this section, on and after 1st October 1966 no gaming machine shall be brought onto or kept on any premises on which gaming by means of such a machine takes place, being premises situated in Great Britain or within the limits of the territorial waters of the United Kingdom adjacent to Great Britain, unless for each such machine on the premises (whether or not in a condition to be made available for play) there is in force and on those premises a gaming machine licence in respect of those premises which is, in accordance with subsection (3) of this section, applicable to that machine.

(2)A gaming machine licence shall not be required in respect of any premises where—

(a)any gaming machine on those premises is there in such circumstances that, by virtue of section 49 or 50 of the Betting, Gaming and Lotteries Act 1963, section 33 of that Act does not apply to gaming by means thereof; or

(b)any gaming machine on those premises is there for the purposes only of an entertainment to which section 43 of that Act applies and the requirements set out in section 49(3)(a) to (d) and (4) of that Act are complied with while it is on those premises.

(3)A gaming machine licence in respect of any premises shall be regarded as applicable to a particular gaming machine on those premises only if—

(a)it was charged with duty under this section of the amount which, in accordance with subsection (4) of this section, is appropriate to that machine ; and

(b)it was granted—

(i)in the case of a machine owned by a person who controls the use of such machines while on those premises, to that person;

(ii)in any other case, to the supplier of the machine.

(4)The amount of the duty under this section—

(a)on a licence relating to a gaming machine in the case of which the game played by means thereof is made playable by the insertion into the machine of a coin or coins lawfully current in the United Kingdom of a denomination or aggregate denomination not exceeding threepence, shall be £37 10s.;

(b)in any other case, shall be £75.

(5)Subject to paragraph 13 of Schedule 3 to this Act, a gaming machine licence shall expire at the end of 30th September falling between three and fifteen months after the date when it is granted.

15Additional or supplementary provisions as to duties on betting or gaming

(1)Where particulars of an intended bet on which the general betting duty or pool betting duty would be chargeable and the stake on that bet are collected for transmission to the person by whom that duty would fall to be paid by some other person, whether or not a bookmaker, who holds himself out as available for so collecting and transmitting them, but are in fact not so transmitted, the bet shall be deemed to have been made but the duty in respect thereof shall be paid by that other person.

(2)Subject to subsection (3) of this section—

(a)section 2 of the Betting Duties Act 1963 (which prohibits certain activities with a view to protecting the revenue derived from the pool betting duty) shall have effect for the purposes of the general betting duty as well as the pool betting duty and, in addition to the bets to which it already applies, shall apply to all bets made on or after 24th October 1966 with a bookmaker outside Great Britain, whether or not made by way of pool betting or coupon betting; and

(b)any bookmaker in Great Britain who on or after 24th October 1966 makes or offers to make with a bookmaker outside Great Britain any bet to which the said section 2 applies shall be guilty of an offence under that section.

(3)The said section 2 shall not apply—

(a)to any bet—

(i)made by way of pool betting or coupon betting and otherwise than by means of a totalisator; or

(ii)made with a bookmaker otherwise than by way of pool betting or coupon betting,

where the promoter of the pool betting or coupon betting or, as the case may be, the bookmaker is in Northern Ireland or the Isle of Man and the bet is such as to be chargeable with a duty imposed by or under an Act of the Parliament of Northern Ireland or, as the case may be, of Tynwald which corresponds to, and is chargeable on the bet at a rate not less than the appropriate rate of, pool betting duty or, as the case may be, general betting duty ; or

(b)to any bet made by means of a totalisator situated in a country outside Great Britain on a horse race taking place in that country; or

(c)to any bet in respect of an event taking place outside Great Britain made by a bookmaker in Great Britain—

(i)by means of a totalisator situated outside Great Britain, or

(ii)with a bookmaker outside Great Britain,

if it is shown that bets in respect of that event have been made in Great Britain with the first-mentioned bookmaker by other persons.

(4)For the avoidance of doubt, it is hereby declared that nothing contained in or done under the provisions of the Betting Duties Act 1963, sections 12 to 14 of this Act or subsection (1) of this section shall make lawful anything which would be unlawful apart from those provisions.

(5)The supplemental provisions set out in Schedule 3 to this Act shall have effect with respect to the duties relating to betting and gaming.

(6)In this section and in the said sections 12 to 14 and Schedule 3, the following expressions have the following meanings respectively, that is to say—

  • " betting agency permit ", " betting office licence ", " bookmaker ", " bookmaker's permit ", " gaming ", " licensed betting office ", " licensed track ", " sponsored pool betting ", " totalisator " and " track" have the same meanings respectively as for the purposes of the Betting, Gaming and Lotteries Act 1963 ;

  • " coupon betting " has the same meaning as for the purposes of section 7(3) of the Finance Act 1964 ;

  • " gaming machine" has the same meaning as for the purposes of section 33 of the Betting, Gaming and Lotteries Act 1963;

  • " hereditament", in relation to Scotland, means lands and heritages;

  • " pool betting ", " promoter " and " winnings " have the same meanings respectively as for the purposes of the Betting Duties Act 1963 ;

  • " premises " includes any place whatsoever and any means of transport;

  • " provider ", in relation to any premises used for gaming, means any person having a right to control the admission of persons to those premises, whether or not he also has a right to control the admission of persons to the gaming;

  • " rateable value ", in relation to any hereditament, means (without prejudice to paragraph 8 of Schedule 3 to this Act) the rateable value shown in the valuation list as for the time being in force ;

  • " supplier", in relation to a gaming machine on any premises, means—

    (a)

    subject to paragraph (b) of this definition, the person by whom the machine was supplied to the person who controls its use while on those premises; or

    (b)

    if the interest in that machine of the person by whom it was so supplied has subsequently been transferred to some other person, the person for the time being entitled to that interest;

  • "valuation list", in relation to Scotland, means valuation roll.

Surcharges and rebates in respect of revenue duties

16Continuation of powers under s. 9 of Finance Act 1961

The period after which orders of the Treasury under section 9 of the Finance Act 1961 may not be made or continue in force (which, by section 4 of the Finance Act 1965, was extended until the end of August 1966) shall extend until the end of August 1967 or such later date as Parliament may hereafter determine.

Part IIIncome Tax

17Charge of income tax for 1966-67

Income tax for the year 1966-67 shall be charged at the standard rate of 8s. 3d. in the pound, and in the case of an individual whose total income exceeds £2,000 at such higher rates in respect of the excess as Parliament may hereafter determine.

18Surtax rates for 1965-66

Income tax for the year 1965-66 shall be charged, in the case of an individual whose total income exceeded £2,000, in respect of the excess at rates in the pound which respectively exceed the standard rate by the amounts by which the higher rates for the year 1964-65 exceeded the standard rate for that year.

19Exemption from tax of social security benefit

Benefit under any Act of the present Session establishing a Ministry of Social Security and providing for benefits eligibility for which is to be determined by a Supplementary Benefits Commission established by the Act, or under any Act of the Parliament of Northern Ireland providing for corresponding benefits, shall not be regarded as income for any income tax purposes.

20Exclusion from relief of interest on Post Office investment deposits

In section 9(1) of the Finance Act 1956 (relief from income tax on certain savings bank interest) the reference to deposits with the Post Office savings bank shall not include a reference to investment deposits as defined in section 1(2) of the Post Office Savings Bank Act 1966.

21Personal reliefs for non-residents

(1)This section has effect as respects the application of the proviso to section 227(2) of the Income Tax Act 1952 (under which certain non-residents are eligible for the personal reliefs from income tax subject to an adjustment made by reference to the amount of income tax payable on certain assumptions) to an individual whose income includes any dividends, interest, royalties or other profits (in this section referred to as income eligible for double taxation relief) which are chargeable to income tax but in respect of which relief (other than credit) is available under an Order in Council under section 347 of the Income Tax Act 1952, or under section 31 of this Act, so as to limit the rate of income tax so chargeable (but not so as to confer an exemption and make it income which is not subject to income tax charged in the United Kingdom).

(2)Subject to subsection (3) below, for the purposes of the said proviso—

(a)in computing the amount of the income tax payable by the individual the tax chargeable in respect of the income eligible for double taxation relief shall be disregarded,

(b)in computing the amount of his income subject to income tax charged in the United Kingdom the income eligible for double taxation relief shall be disregarded, and

(c)in computing his total income from all sources, including income which is not subject to income tax charged in the United Kingdom, income eligible for double taxation relief shall be included and the income tax which would be chargeable on that total income shall be computed without regard to the double taxation relief available in respect of the income eligible for double taxation relief,

and accordingly where this subsection applies the amount of the tax chargeable in respect of the income eligible for double taxation relief shall not be affected by the said section 227(2).

(3)This section shall not operate so as to make the tax payable by an individual for a year of assessment higher than it would have been if the double taxation relief had not been available.

(4)This section has effect as respects the year 1966-67 and subsequent years of assessment.

22India, Pakistan and Burma pensions

(1)Section 40(1)(a) of the Finance Act 1956 (which exempts from income tax a pension paid under the authority of the Pensions (India, Pakistan and Burma) Act 1955 if it is the income of a person not resident in the United Kingdom, but not the part of the pension paid by virtue of the Pensions (Increase) Act 1962 or earlier Pensions (Increase) Acts) shall have effect subject to the provisions of this section.

(2)The said section 40(1) shall not apply to so much of any pension of the description in paragraph (a) thereof as is paid by virtue of the application to the pension of the Pensions (Increase) Act 1965 or of any Act passed after this Act for purposes corresponding to the purposes of the said Act of 1965.

23Surtax on income under certain settlements: exceptions to s. 415(1) of Act of 1952

(1)Notwithstanding section 12(1) of the Finance Act 1965 (which extends section 415(1) of the Income Tax Act 1952 so as to treat certain income arising under a settlement as being for surtax purposes the income of the settlor) the said section 415(1) shall not apply to income consisting of annual payments made under a partnership agreement to or for the benefit of a former member, or the widow or dependants of a deceased former member, of the partnership, being payments made under a liability incurred for full consideration.

(2)Notwithstanding the said section 12(1), the said section 415(1) shall not apply to income consisting of annual payments made by an individual, in connection with the acquisition by him of the whole or part of a business—

(a)to or for the benefit of the individual from whom it is acquired or, if he is dead, to or for the benefit of his widow or dependants, or

(b)if the acquisition was from a partnership, to or for the benefit of a former member, or the widow or dependants of a deceased former member, of that or any preceding partnership, or to or for the benefit of an individual from whom the business or part was acquired by that or any preceding partnership or, if he is dead, to or for the benefit of the widow or dependants of such an individual,

being payments made under a liability incurred for full consideration.

(3)Payments made in respect of any individual under a liability incurred in connection with an acquisition from a partnership shall only be excluded from the operation of the said section 415(1) by virtue of paragraph (b) of the last foregoing subsection if, and to the extent that, they are made in substitution for, or matched by reductions in, other payments which would themselves be excluded from its operation.

(4)Where the right of a former member of a partnership to payments falling due not more than ten years after he ceased to be a member of that partnership has devolved on his death, subsections (1) and (2) above shall apply to the payments as they would apply if he had not died.

(5)Notwithstanding the said section 12(1), the said section 415(1) shall not apply to income arising under a settlement made by one party to a marriage by way of provision for the other after the dissolution or annulment of the marriage, or while they are separated under an order of a court or under a separation agreement or in such circumstances that the separation is likely to be permanent, being income payable to or applicable for the benefit of that other party.

(6)For the purposes of this section—

(a)" former member ", in relation to a partnership, means an individual who has ceased to be a member of that partnership on retirement or death,

(b)a partnership becomes a " preceding partnership " of another if it transfers its business or part of its business to another and one or more individuals are members of both, and any preceding partnership of the transferor by reference to any part of the business transferred shall also become a preceding partnership of the transferee.

(7)This section shall be in substitution for section 12(3) of the Finance Act 1965, and shall have effect for the year 1965-66 as well as for later years of assessment.

24Dividend increases etc. in 1965-66: exclusion of surtax relief under s. 238 of Act of 1952

(1)Relief shall not be given under section 238 of the Income Tax Act 1952 (relief from surtax where income attributable to a period exceeding a year is received in a year) in respect of any dividends which apart from that section fall to be treated as income of the year 1965-66, being dividends paid by a company resident in the United Kingdom and not being preference dividends.

(2)In this section—

  • " company " includes any body corporate,

  • " preference dividends" means dividends paid on shares which do not carry any right to dividends other than dividends at a rate per cent. of the nominal value of the shares which is fixed, or fluctuates only with the standard rate of income tax,

  • " shares " includes stock.

25Directors and employees of companies granted rights to acquire shares

(1)Where on or after 3rd May 1966 a person realises a gain by the exercise, or by the assignment or release, of a right to acquire shares in a body corporate obtained by that person as a director or employee of that or any other body corporate he shall be chargeable to income tax under Schedule E on an amount equal to the amount of his gain as computed in accordance with this section.

(2)Subject to subsection (8) below—

(a)the gain realised by the exercise of any such right at any time shall be taken to be the difference between the amount that a person might reasonably expect to obtain from a sale in the open market at that time of the shares acquired and the amount or value of the consideration given whether for them or for the grant of the right, and

(b)the gain realised by the assignment or release of any such right shall be taken to be the difference between the amount or value of the consideration for the assignment or release and the amount or value of the consideration given for the grant of the right,

(a just apportionment being made of any entire consideration given for the grant of the right to acquire those shares and other shares or otherwise for the grant of the right to acquire those shares and for something besides) :

Provided that neither the consideration given for the grant of the right nor any such entire consideration shall be taken to include the performance of any duties in or in connection with the office or employment by reason of which the right was granted, and no part of the amount or value of the consideration given for the grant shall be deducted more than once under this subsection.

(3)Subject to subsection (4) below a person shall, in the case of a right granted by reason of his office or employment, be chargeable to tax under this section in respect of a gain realised by another person—

(a)if the right was granted to the other person, or

(b)if the other person acquired the right otherwise than by or under an assignment made by way of a bargain at arm's length, or if the two are connected persons at the time when the gain is realised,

but in a case within paragraph (b) of this subsection the gain realised shall be treated as reduced by the amount of any gain realised by a previous holder on an assignment of the right.

(4)A person shall not be chargeable to tax by virtue of subsection (3)(b) above in respect of any gain realised by another person if the first-mentioned person was divested of the right by operation of law on his bankruptcy or otherwise, but the other person shall be chargeable to tax in respect of the gain under Case VI of Schedule D.

(5)If a right to acquire shares in a body corporate is assigned or released in whole or in part for a consideration which consists of or comprises another right to acquire shares in that or any other body corporate, that right shall not be treated as consideration for the assignment or release, but this section shall apply in relation to it as it applies in relation to the right assigned or released and as if the consideration for its acquisition did not include the value of the right assigned or released but did include the amount or value of the consideration given for the grant of the right assigned or released so far as that has not been offset by any valuable consideration for the assignment or release other than the consideration consisting of the other right.

(6)If as a result of two or more transactions a person ceases to hold a right to acquire shares in a body corporate and he or a connected person comes to hold another right to acquire shares in that or any other body corporate (whether or not acquired from the person to whom the other right was assigned) and any of those transactions was effected under arrangements to which two or more persons holding rights in respect of which tax may be chargeable under this section were parties, those transactions shall be treated for the purposes of the last foregoing subsection as a single transaction whereby the one right is assigned for a consideration which consists of or comprises the other right. This subsection applies in relation to two or more transactions whether they involve an assignment preceding, coinciding with, or subsequent to, an acquisition.

(7)This section applies in relation to rights granted at any time in the year 1965-66 or any earlier year of assessment as well as in relation to rights granted in any later year of assessment, but subject to the following subsection.

(8)The amount of the gain realised at any time by the exercise, or by the assignment or release, of a right to acquire shares granted before 3rd May 1966 shall not exceed the difference between the market value of those shares at that time and their market value on 3rd May 1966 (and no gain shall be so realised unless the later value exceeds the earlier value).

(9)For the purposes of this section a right to acquire shares is obtained by a person as a director or employee of a body corporate—

(a)if it is granted to him by reason of his office or employment as a director or employee of the body corporate who is chargeable to tax in respect of that office or employment under Case I of Schedule E, or

(b)if the right is assigned to him and was granted by reason of any such office or employment of his to some other person,

and paragraph (a) above shall apply to a right granted by reason of a person's office or employment after he has ceased to hold it if it would apply to a right so granted in the last year of assessment in which he did hold it.

(10)For the purposes of this section—

(a)references to the release of a right include references to agreeing to the restriction of the exercise of the right,

(b)any question whether a person is connected with another shall be determined in accordance with paragraph 20 of Schedule 9 to the Finance Act 1962,

(c)" director " and " employee " have the meanings given by section 390(1) of the Income Tax Act 1952,

(d)in so far as the context permits, " shares" includes stock,

and this section shall apply in relation to any securities (as defined in paragraph 7(1) of Schedule 11 to the Finance Act 1965) issued by a body corporate as it applies in relation to shares in the body corporate.

(11)Schedule 4 to this Act shall apply for the purposes of this section and shall be construed as if contained in this section.

Part IIICorporation Tax Acts

26Rate of corporation tax for financial years 1964 and 1965, and provisional collection of corporation tax

(1)For the financial years 1964 and 1965 the rate at which corporation tax is charged shall be 40 per cent.

(2)Section 49(6) of the Finance Act 1965 (provisional collection of corporation tax) shall have effect subject to the following amendments (under which the latest date for a ways and means resolution fixing the rate of corporation tax for the financial year last ended becomes the same as is, under section 2 of the Provisional Collection of Taxes Act 1913, the latest date for such a resolution imposing income tax for the current year of assessment, and which exclude the conditions in that subsection concerning the agreement of the Commons House of Parliament to such resolutions)—

(a)the words " and the Resolution is agreed to by the House " shall cease to have effect,

(b)for the words " more than one month " there shall be substituted the words

later than 5th May next, and

(c)the words " and agreed to " shall cease to have effect.

27Amendments of Corporation Tax Acts

Schedule 5 to this Act, which contains amendments of the Corporation Tax Acts relating to deductions allowable in computing profits, capital gains, annuity business of assurance companies, close companies, the definition of company distributions and other matters, and Schedule 6 to this Act, which contains administrative provisions for the Corporation Tax Acts, shall have effect.

28Dividends paid out of pre-1966-67 profits

(1)Subject to this section, in ascertaining under section 85 of the Finance Act 1965 the one year surplus of a company which is a member of a group of companies, there shall be excluded from the dividends taken into account under subsection (3)(a) of that section any dividends paid by another member of the group, and—

(a)references in subsections (5) and (8) of that section to the income tax at the said subsection (3)(a) shall be taken as references to the said subsection (3)(a) as restricted by the foregoing provisions of this section,

(b)in arriving at the fraction defined at the end of the said subsection (3) (income tax for 1965-66 divided by that plus corporation tax for the financial year 1965) income tax on dividends so excluded shall be excluded from the numerator and denominator, and

(c)subsection (4) of the said section 85 (which is superseded by this subsection) shall not apply.

(2)If the one year surplus of a company which is a member of a group of companies as determined under subsection (1) above is less than the amount on which the repayments of income tax under the said section 85 by reference to a one year surplus would equal the income tax paid by the company on distributions made by it in the year 1966-67 but before 3rd May 1966, then subsection (1) above shall not apply, but the company's one year surplus shall be determined as if in subsection (2)(a) of the said section 85 the reference to distributions made by the company in the year 1966-67 were restricted to distributions made before 3rd May 1966.

(3)For the purposes of this section a dividend (including a capital dividend) paid on or after 3rd May 1966 shall be regarded as having been paid before that date if—

(a)it was declared by the company in general meeting before that date, or

(b)it was declared in general meeting after that date but in accordance with a recommendation of the directors and the directors' decision to make that recommendation was, with the authority of the directors, publicly announced before that date, or

(c)it was paid in accordance with a decision of the directors and that decision was, with their authority, publicly announced before that date.

(4)Part I of Schedule 7 to this Act shall have effect as respects the three year surplus under the said section 85 of a company which is a member of a group of companies and for the purposes of this section and paragraphs 1 to 4 of that Schedule—

(a)two companies shall be deemed to be members of a group of companies if one is the subsidiary of the other or both are subsidiaries of a third company.

(b)" subsidiary " has the meaning assigned to it for certain purposes of the profits tax by section 42 of the Finance Act 1938, and subsections (2) and (3) of that section shall apply as they applied for purposes of that section,

and the provisions of the said section 85 relating to the one year surplus shall have effect subject to the provisions of Part II of Schedule 7 to this Act.

(5)This section and the said Schedule shall have effect as if they had been enacted when the Finance Act 1965 was enacted.

29Registered friendly societies carrying on life or endowment business

(1)Section 440(1) of the Income Tax Act 1952 (which, as applied, and extended to tax on chargeable gains, by the Corporation Tax Acts confers an exemption from tax on friendly societies) shall not apply to profits arising from life or endowment business unless that business satisfies the conditions in Part I of Schedule 8 to this Act, and so far as the said section 440(1) relates to profits arising from life or endowment business it shall not exempt—

(a)a friendly society registered after 31st December 1957 which at any time in the period of three months ending on 3rd May 1966 entered into any transaction in return for a single premium, being a transaction forming part of its life or endowment business, or

(b)subject to subsections (2) and (3) below, a friendly society registered after 3rd May 1966, or a friendly society which was registered in the period of three months ending on 3rd May 1966 but which at no time earlier than 3rd May 1966 carried on any life or endowment business.

(2)Subsection (1)(b) above shall not apply to a friendly society if, by the rules of the society, the only life or endowment business which it may carry on is—

(a)industrial assurance business as defined in section 1(2) of the Industrial Assurance Act 1923,

(b)assurance affording provision for sickness or other infirmity, whether bodily or mental, which is also assurance for a gross sum independent of sickness or other infirmity, where not less than sixty per cent. of the amount of the premiums is attributable to the provision afforded during sickness or other infirmity, and no bonus or addition may be declared upon the assurance of the gross sum, or

(c)contracts exclusively for the assurance of a gross sum or annuity payable on death to or for the benefit of the deceased's widow or dependent child,

or business which falls within any two or all three of paragraphs (a), (b) or (c) above taken together.

(3)Subsection (1)(b) above shall not apply to any part of a friendly society's tax exempt life or endowment business which it acquires by way of transfer of engagements or amalgamation from another friendly society, and which consists of business relating to contracts made not later than the time of transfer or amalgamation.

(4)The limits of £500 and £104 in the proviso to section 8(1), and in section 41, of the Friendly Societies Act 1896 (which restrict the life assurance and annuity business which a registered friendly society may transact either generally or with any one person) shall be increased in accordance with Part II of Schedule 8 to this Act, and so much of section 440(1) of the Income Tax Act 1952 as applies limits of those amounts shall cease to have effect, but the said section 440(1) shall not apply to profits arising from life or endowment business consisting of the assurance of gross sums exceeding £500 or of the granting of annuities of annual amounts exceeding £104. In applying the said limits of £500 and £104 any bonus or addition declared upon assurance of a gross sum or annuity shall be disregarded.

(5)Subject to the said section 440(1) of the Income Tax Act 1952, the Corporation Tax Acts shall apply to the life or endowment business carried on by registered friendly societies in the same way as they apply to mutual life assurance business carried on by assurance companies, so however that the Treasury may by regulations contained in a statutory instrument subject to annulment in pursuance of a resolution of the Commons House of Parliament provide that those Acts as so applied shall have effect subject to such modifications and exceptions as may be prescribed by the regulations, and those regulations may in particular require any part of any business to be treated as a separate business.

(6)If a friendly society registered not later than 3rd May 1966 begins after that date to carry on tax exempt life or endowment business or, in the opinion of the Chief Registrar of Friendly Societies, begins to carry on tax exempt life or endowment business on an enlarged scale, or of a new character, and it appears to the Chief Registrar, having regard to the restrictions placed on friendly societies registered after the said date by subsection (1)(b) of this section, that for the protection of the revenue it is expedient to do so, he may serve a notice on the friendly society referring to the provisions of this subsection and stating that he is considering the question whether, for the protection of the revenue, it is expedient to give a direction that, as from such date as may be specified in the notice, being the date when in the opinion of the Chief Registrar the relevant change in the society's activities took place, the society is to be treated as one within subsection (1)(b) of this section, and—

(a)he shall consider any representations or undertakings made or offered to him by the friendly society within the period of one month from service of the notice, and if the society so requests shall afford it an opportunity of being heard by him not later than three weeks after the end of that period of one month,

(b)if after consideration of any such representations or undertakings, he remains of opinion that it is expedient to do so, direct that the society shall, subject to any further direction given by him cancelling that direction, be treated for the purposes of this section as a friendly society registered after 3rd May 1966, but subject to the like right of appeal as is conferred by section 77(6) of the Friendly Societies Act 1896 on cancellation of registration. In the application of this subsection to Scotland for references to the Chief Registrar of Friendly Societies there shall be substituted references to the assistant registrar for Scotland.

(7)Nothing in this section shall affect the exemption conferred by section 440(1) of the Income Tax Act 1952 on unregistered friendly societies.

(8)In this section and Schedule 8 to this Act " life or endowment business " means any business within section 8(1)(b) or (d) or (dd) of the Friendly Societies Act 1896 (life insurance and endowments and insurance of money payable on the duration of a life for a specified period) and any other business within the definition of " life assurance business" in section 33(1) of the Insurance Companies Act 1958 but—

(a)shall include business within section 8(1)(a) of the Friendly Societies Act 1896 for the relief or maintenance of any person in old age (meaning any age after fifty),

(b)shall not include the granting of any such annuities as are referred to in section 26(1) of the Finance Act 1956 (retirement annuities, etc.),

(c)shall not include the assurance of any annuity the consideration for which consists of sums obtainable on the maturity, or on the surrender, of any other policy of assurance issued by the friendly society, being a policy of assurance forming part of the tax exempt life or endowment business of the friendly society.

(9)In this section and the said Schedule—

  • " tax exempt life or endowment business " means life or endowment business other than business profits arising from which are excluded from section 440(1) of the Income Tax Act 1952 by subsection (4) of this section.

  • " policy ", in relation to life or endowment business, includes an instrument evidencing a contract to pay an annuity upon human life, and references in this section and the said Schedule to a friendly society include references to any branch of that friendly society.

(10)It is hereby declared that for the purposes of this section and the said Schedule a registered friendly society formed on the amalgamation of two or more friendly societies shall be treated as different from the amalgamated societies:

Provided that—

(a)the society shall be treated as registered not later than 3rd May 1966 if at the time of the amalgamation all the friendly societies amalgamated were societies which, subject to satisfying the conditions of Part I of Schedule 8 to this Act, were eligible for the exemption conferred by section 440(1) of the Income Tax Act 1952 in respect of life or endowment business and at least one of them was a society not within subsection (1)(b) of this section,

(b)in determining, as respects a society resulting from an amalgamation and coming within subsection (6) of this section by virtue of proviso (a) above, the questions in that subsection in the period immediately following the amalgamation, the activities of the amalgamated societies in the period immediately preceding the amalgamation shall be treated as if they were the activities then being carried on by the society resulting from the amalgamation.

(11)This section has effect for corporation tax for the financial year 1966 and later financial years and for income tax for the year 1966-67 and later years of assessment, but nothing in this section shall withdraw exemption under section 440(1) of the Income Tax Act 1952 for profits arising from any part of a life or endowment business relating to contracts made not later than 3rd May 1966.

(12)In the application of this section and the said Schedule to a friendly society which is for the time being registered or deemed to be registered in Northern Ireland under the enactments relating to friendly societies in Northern Ireland—

(a)for references to section 1(2) and section 24 of the Industrial Assurance Act 1923 there shall be substituted references to section 1(2) and section 24 respectively of the Industrial Assurance Act (Northern Ireland) 1924,

(b)for references to the Friendly Societies Act 1896 or to any provision of that Act there shall be substituted references to that Act or provision as it applies in Northern Ireland,

(c)for the reference in paragraph 1(1)(c) of the said Schedule to section 3 of the Industrial Assurance and Friendly Societies Act 1929 there shall be substituted a reference to the Industrial Assurance and Friendly Societies Act (Northern Ireland) 1929,

(d)for the reference to section 33(1) of the Insurance Companies Act 1958 there shall be substituted a reference to section 1(a) of the Assurance Companies Act 1909,

(e)for references to the Chief Registrar of Friendly Societies there shall be substituted references to the registrar having corresponding functions under the law of Northern Ireland, and so that any power exercisable by the Chief Registrar with the consent of the Treasury shall be exercisable by that registrar with the consent of the Ministry of Commerce of the Government of Northern Ireland,

and nothing in this section or the said Schedule shall restrict the powers of the Parliament of Northern Ireland to make laws with respect to any matter with respect to which that Parliament has power to make laws.

Double taxation relief

30Unilateral relief for underlying tax etc.

(1)Paragraph 4 of Part I of Schedule 17 to the Income Tax Act 1952 (which as extended by section 64 of the Finance Act 1965 affords unilateral relief from income tax and corporation tax in respect of dividends paid by companies resident in the Commonwealth territories, for overseas taxation on their profits) shall be repealed as respects any dividend paid (in the sense of section 89(4) of the Finance Act 1965) after 5th April 1966, and section 64(2)(b) of the Finance Act 1965 (which provides for the prospective repeal of the said paragraph 4) shall also be repealed.

(2)Relief from income tax for the year 1968-69 or later years of assessment, or from corporation tax for the financial year 1968 or later years, shall not be given by allowing credit under paragraph 1 of Part I of the said Schedule 17 for overseas tax on a dividend paid by a company resident in a territory outside the United Kingdom unless—

(a)the overseas tax is directly charged on the dividend, whether by charge to tax or deduction of tax at source or otherwise, and the whole of it represents tax which neither the company nor the recipient would have borne if the dividend had not been paid, or

(b)the dividend is paid to a company within paragraph 3 in the said Part I (that is to say a company resident in the United Kingdom which controls, directly or indirectly, not less than a fraction of the voting power in the company paying the dividend, the fraction being, by virtue of paragraph 4(3) of Schedule 16 to the Finance Act 1965, one-tenth as respects dividends paid by a company resident in the Commonwealth territories and one-quarter in other cases), or

(c)the dividend is paid to a company to which paragraph 5(1) of the said Schedule 16 (companies carrying on foreign insurance business) applies and is a dividend of the kind described in that sub-paragraph.

31Transitory provisions for company dividends paid to non-residents

(1)This section applies to dividends paid in the period comprising the years 1966-67 and 1967-68 to persons resident in the overseas territories with the Governments of which the double taxation agreements mentioned in Schedule 9 to this Act are made, but the Treasury may by order contained in a statutory instrument, of which a draft has been laid before and approved by the Commons House of Parliament, extend or further extend that period in relation to dividends paid to residents in any of those territories specified in the order (or in relation to dividends paid to residents in all those territories), and the period as so extended or further extended may include part only of a year of assessment.

(2)Subject to this section and the said Schedule, the amount of income tax under Schedule F chargeable in respect of a dividend to which this section applies shall be subject to such limitation or exemption, if any, as would apply under the relevant agreement in the converse case (that is in the case of a dividend paid by a company resident in the overseas territory to a person resident in the United Kingdom, and assuming that all the circumstances of that case are the exact converse of those of the actual case) so as to afford relief from any description of tax in the overseas territory chargeable on the dividend in that converse case.

(3)If without this subsection subsection (2) above would attach a condition making the limitation or exemption dependent on the recipient of the dividend being subject to tax where he resides in respect of the dividend, that condition shall not apply if he is not so subject to tax by reason only of a provision in an agreement having effect under section 347 of the Income Tax Act 1952 which in all or any circumstances confers exemption from all tax where he resides in respect of dividends.

(4)Any limitation (as well as any exemption) applied by subsection (2) above to the amount of income tax under Schedule F chargeable in respect of a dividend—

(a)shall be included in the references to exemption from income tax in section 65(5) of the Finance Act 1965 (dividend stripping, etc.), and

(b)where the recipient of the dividend is not subject to tax where he resides in respect of the dividend, shall for the purposes of section 23 of the Finance Act 1959 (certain transactions involving purchase and sale of securities) be included in the references to exemption from income tax in section 25(1) of that Act.

(5)If any agreement, or any provision in an agreement, ceases to have effect, this section and Schedule 9 to this Act shall cease to have effect in relation to that agreement or that provision as respects dividends paid after the time when that agreement ceases to have effect for the purposes of income tax (other than surtax), or as the case may be as respects dividends paid after the time when that provision ceases to have effect.

(6)If effect is given by an Order in Council to an amending agreement which, as regards dividends paid after a specified time, affords (in any circumstances) relief from income tax at the standard rate under Schedule F (other than relief corresponding to that afforded by section 227(2) of the Income Tax Act 1952) this section and Schedule 9 to this Act shall, as regards dividends paid after that time, cease to have effect in relation to the agreement which is amended.

(7)In determining for the purposes of section 347(4) of the Income Tax Act 1952 (under which effect may be given to double taxation agreements giving retrospective relief) whether retrospective provisions are provisions for relief the relief afforded by this section, and the withdrawal of that relief by virtue of the last foregoing subsection in consequence of the amendment of the relevant agreement, shall be disregarded.

(8)The obligations as to secrecy imposed by the Income Tax Acts and the Corporation Tax Acts upon persons employed in relation to Inland Revenue shall not prevent the disclosure to the authorised officer of the Government of an overseas territory which is a party to any of the double taxation agreements mentioned in Schedule 9 to this Act of such facts as may be necessary to enable the proper relief to be given under this section.

(9)The powers of making regulations conferred by section 351 of the Income Tax Act 1952 shall be exercisable for the purpose of carrying out the provisions of this section, and the provisions of double taxation agreements as applied by this section, as they are exercisable for the purpose of carrying out the provisions of section 347 of that Act, and of arrangements having effect thereunder.

(10)Effect shall be given to the relief afforded by this section on a claim to which section 9 of the Income Tax Management Act 1964 shall apply, but subject to any provisions made pursuant to the last foregoing subsection for the payment of dividends without deduction of all or any tax.

(11)In this section and in Schedule 9 to this Act—

(a)in relation to a dividend paid to a person resident in an overseas territory " the overseas territory " means that territory and " the relevant agreement " means the double taxation agreement in the Order in Council mentioned in Schedule 9 to this Act which concerns that overseas territory with any amendments to which effect is given by any subsequent Order in Council made before or after the passing of this Act,

(b)references to residence shall be construed in accordance with the relevant agreement,

and section 89(4) of the Finance Act 1965 shall apply to determine for the purposes of this section and Schedule 9 to this Act the date when any dividend chargeable to income tax under Schedule F is paid.

32Transitory provisions for interest and royalties paid to non-residents

(1)This section applies to any payments to a person resident in an overseas territory made in the period comprising the financial years 1966 and 1967, but the Treasury may by order contained in a statutory instrument, of which a draft has been laid before and approved by the Commons House of Parliament, extend or further extend that period in relation to residents in an overseas territory specified in the order (or residents in all overseas territories) and the period as so extended or further extended may include part only of a financial year.

(2)In Schedule 11 to the Finance Act 1965 (which defines company distributions) neither—

(a)paragraph 1(1)(d)(iv) (which, as amended by this Act,

relates to interest, etc., in respect of securities held by a company which is not resident in the United Kingdom and is in the same group of companies as the paying company), nor

(b)paragraph 9(1)(c) (royalties paid by a close company to a participator),

shall apply to any such payment if, under an existing double taxation agreement, the recipient is entitled to relief (whether by way of exemption from tax, or by virtue of a limitation on the rate of tax) from income tax (not including surtax) chargeable in the United Kingdom on that payment.

(3)Subsection (2) above shall not apply to any payment to a company more than fifty per cent. of the voting power in which is controlled, directly or indirectly, by a person or persons resident in the United Kingdom.

(4)In this section " existing double taxation agreement" means any arrangements having effect by virtue of section 347 of the Income Tax Act 1952, being arrangements specified in an Order in Council under that section of which the draft was approved by the Commons House of Parliament before 1st January 1966, together with any other such arrangements, whenever made, providing for their modification in any respect; but any arrangements taking effect under the said section 347 after the passing of this Act and modifying an existing double taxation agreement in any respect may exclude the provisions of this section as they apply in relation to that agreement, and the exclusion shall be as respects payments, or a specified description of payments, made after the date specified in the arrangements, which may be a date before or after the making of the arrangements.

(5)In this section " overseas territory", in relation to an existing double taxation agreement, means the territory (other than the United Kingdom) to which the agreement applies.

33Transitory provisions for double taxation agreements having retrospective effect

(1)Any arrangements to which effect is given under section 347 of the Income Tax Act 1952 by virtue of an Order in Council made in pursuance of an Address presented to Her Majesty by the Commons House of Parliament before 1st January 1968 may include a provision which withdraws relief from corporation tax afforded by provisions of an existing double taxation agreement concerning interest or royalties notwithstanding that the relief so withdrawn is for periods which include periods before the making of the arrangements.

(2)In this section " existing double taxation agreement" means any arrangements to which effect has been given under the said section 347 by virtue of an Order in Council made before the passing of this Act.

(3)This section applies in relation to corporation tax for the financial years 1964 and 1965 or for any later financial year.

34Regulations relating to double taxation relief

(1)In section 351(1)(c) of the Income Tax Act 1952 (which authorises the making of the necessary adjustments in respect of income tax deductible from any periodical payment where the tax has not been, but ought to have been, deducted) the word " periodical " (in the expression " periodical payment ") shall cease to have effect.

(2)The giving of relief under Part XIII of the Income Tax Act 1952 (double taxation relief), or under this Act, in respect of income tax under Schedule F by authorising, pursuant to regulations under the said section 351, the making of distributions of amounts exceeding what would otherwise be distributed shall not affect the provisions of section 47(2) of the Finance Act 1965 (which determine the amount of income tax under Schedule F chargeable in respect of any distribution), and references in that subsection to the amount of the distribution shall be taken as references to that amount, apart from any increase made in pursuance of such regulations.

Part IVIncome Tax and Corporation Tax

35Abolition of investment allowances and amendments as to initial allowances

(1)Subject to subsection (2) of this section, section 16 of the Finance Act 1954 and section 21(4)(a) of the Finance Act 1959 (which provide for giving investment allowances in respect of capital expenditure on certain new assets) and section 21(2) and (4)(b) of the said Act of 1959 (by virtue of which initial allowances in respect of such expenditure are reduced) shall not apply to expenditure incurred on or after 17th January 1966.

(2)Without prejudice to subsection (3) of this section, the foregoing subsection shall not affect the application of any of the enactments specified in Part IV of Schedule 13 to this Act to any expenditure in respect of an asset in so far as that expenditure consists (and is stated in the certificate required by subsection (7) of the said section 16 or, as the case may be, by paragraph 1 of Schedule 5 to the said Act of 1959 to consist) of the payment of sums payable under a contract entered into on a date (to be specified in that certificate) not later than 16th January 1966 where that asset is brought into use not later than 16th January 1968.

(3)No investment allowance under the said section 16 or the said section 21(4)(a) and no initial allowance under section 265(1), 279(1) or 306 of the Income Tax Act 1952 or under section 17(1)(a) of the Finance Act 1956 shall be made in respect of so much of any expenditure as is taken into account for the purposes of any relevant grant made towards that expenditure, or be made by virtue of section 332(3) of the said Act of 1952 in respect of a proportionate part of any contribution towards that expenditure; and, if any such grant is made after the making of any such allowance, that allowance shall to that extent be withdrawn. In this subsection, the expression " relevant grant" means a grant towards capital expenditure incurred by a person carrying on a business, being—

(a)a grant made under an Act of the present Session or in pursuance of a scheme under an enactment amended by an Act of the present Session; or

(b)a grant made under an enactment of the Parliament of Northern Ireland or out of moneys provided by that Parliament which appears to the Treasury to be made towards expenditure and for a purpose corresponding respectively to expenditure towards which and a purpose for which a grant such as is mentioned in paragraph (a) of this definition may be made,

and in either case being a grant declared by the Treasury by order made by statutory instrument to be relevant for the purposes of the withholding or withdrawal of investment and initial allowances.

(4)Where the amount of any relevant grant within the meaning of subsection (3) of this section towards any expenditure is repaid in whole or in part by the grantee to the grantor, then to the extent to which it has been so repaid it shall be deemed never to have been made.

(5)All such assessments or adjustments of assessments to income tax, corporation tax or profits tax shall be made as may be necessary in consequence of the provisions of subsection (3) or (4) of this section and, notwithstanding anything in any other provision, the time within which such an assessment or adjustment may be made shall not expire before the expiration of three years from the end of the chargeable period in which the grant referred to in the said subsection (3) or, as the case may be, the repayment referred to in the said subsection (4) was made.

(6)This section shall be construed as if it were contained in Part X of the Income Tax Act 1952.

36Termination of free depreciation in development districts

(1)Any district which, immediately before 17th January 1966, was a development district for the purposes of sections 38 and 39 of the Finance Act 1963 (which relate to the computation of writing down allowances for new machinery and plant, or, as the case may be, for new mining expenditure, in certain districts in Great Britain and in districts within Northern Ireland) shall be deemed to have ceased to be such a development district on that date and, save by virtue of subsection (7) of the said section 38, no district shall be treated as such a development district as respects any period falling on or after that date.

(2)Subject to subsection (3) of this section, the said subsection (7) (which makes provision for the application of the said section 38 to a district in Great Britain which ceases to be a development district and, as applied by subsection (3) of the said section 39, makes the like provision in relation to the said section 39) shall have effect as if the words " in Great Britain " were omitted.

(3)Notwithstanding anything in the said subsection (7), the said section 38 or 39 shall not apply in relation to a writing down allowance in respect of, or of any contribution towards, any expenditure if a relevant grant within the meaning of section 35(3) of this Act is made in respect of that expenditure and that grant—

(a)by reason of that expenditure being incurred in connection with an area in relation to which the powers conferred by Part I of the Local Employment Act 1960 are for the time being exercisable, is (or, but for any reduction by reference to a grant under section 1 of the Local Employment Act 1963, would be) payable at a higher rate than that at which it would otherwise have been payable; or

(b)is payable under an enactment of the Parliament of Northern Ireland and is declared by the Treasury by order made by statutory instrument to be comparable to a grant falling within paragraph (a) of this subsection.

(4)Subsection (5) of section 35 of this Act shall have effect for the purposes of this section as if the references in that subsection to subsection (3) of that section included references to subsection (3) of this section.

37Vehicles which are to be eligible for initial allowances

(1)Vehicles of a construction primarily suited for the conveyance of goods or burden of any description shall be excluded from section 13(1) of the Finance Act 1965 (which makes certain cars ineligible for initial allowances).

(2)This section has effect as respects expenditure incurred on the provision of vehicles after 16th January 1966, and all such adjustments shall be made, whether by repayment or discharge of tax or otherwise, as are required to give effect to the provisions of this section.

(3)Expenditure shall not be treated for the purposes of this section as having been incurred after 16th January 1966 by reason only of section 279(2) of the Income Tax Act 1952 (which relates to expenditure incurred by a person for the purposes of a trade before he begins to carry it on).

38Statutory redundancy payments

(1)Any redundancy payment, and the corresponding amount of any other employer's payment, shall be exempt from income tax under Schedule E.

(2)Where a redundancy payment or other employer's payment is made in respect of employment wholly in a trade, profession or vocation carried on by the employer, and within the charge to income tax or corporation tax, the amount of the redundancy payment or the corresponding amount of the other employer's payment shall (if not otherwise so allowable) be allowable as a deduction in computing for the purposes of Schedule D the profits or gains or losses of the trade, profession or vocation, but if it is so allowed by virtue of this section the amount of the rebate recoverable shall (if it is not otherwise to be so treated) be treated as a receipt to be brought into account in computing those profits or gains ; and if the employer's payment was made after the discontinuance of the trade, profession or vocation the net amount so deductible shall be treated as if it were a payment made on the last day on which the trade, profession or vocation was carried on.

(3)Where a redundancy payment or other employer's payment is made in respect of employment wholly in a business carried on by the employer, and expenses of management of the business are eligible for relief under section 57 of the Finance Act 1965 as extended by section 67(1)(b) of that Act (investment companies and unit trusts) the amount by which the redundancy payment, or the corresponding amount of the other employer's payment, exceeds the recoverable rebate shall (if not otherwise so allowable) be allowable as expenses of management eligible for relief under that section; and if the employer's payment was made after the discontinuance of the business the net amount so allowable shall be treated as if it were expenses of management incurred on the last day on which the business was carried on.

(4)Where a redundancy payment or other employer's payment is made in respect of employment wholly in maintaining or managing property the expenses of maintaining or managing which were eligible for relief under paragraph 1 or paragraph 13 of Schedule 4 to the Finance Act 1963 (allowable deductions for tax under Case VIII and certain other tax), the amount by which the redundancy payment or the corresponding amount of the other employer's payment exceeds the recoverable rebate shall (if not otherwise allowable under that Schedule) be treated for the purposes of the said Schedule as a payment made by the employer in respect of the maintenance or management of the property, or of such part of it as he may elect; and if the employer's payment was made after the latest time when it could be taken into account for the purposes of relief under the said Schedule 4 as a payment in respect of the maintenance or management of the property or any part of it, it shall be treated as having been made at that time.

(5)Relief shall not be given under subsections (2), (3) and (4) of this section, or otherwise, more than once in respect of any employer's payment, and if the employee was being employed by the employer in such a way that different parts of the employee's remuneration fell for income tax or corporation tax purposes to be treated in different ways, the amount by which the redundancy payment, or the corresponding amount of the other employer's payment, exceeds the recoverable rebate shall be apportioned to the different capacities in which the employee was employed, and subsections (2), (3) and (4) above shall apply separately to the employment in those capacities, and by reference to the apportioned part of the said amount, instead of by reference to the full amount of the employer's payment, and the full amount of the rebate.

(6)Where the Minister pays a sum under section 32 of the Redundancy Payments Act 1965 or section 42 of the Contracts of Employment and Redundancy Payments Act (Northern Ireland) 1965 in respect of an employer's payment this section shall apply as if that sum had been paid on account of that redundancy or other employer's payment and, so far as the employer has reimbursed the Minister, as if it had been so paid by the employer.

(7)In this section " redundancy payment", " employer's payment " and " rebate " have the same meaning as in Part II of the Redundancy Payments Act 1965 or Part III of the Contracts of Employment and Redundancy Payments Act (Northern Ireland) 1965, and—

(a)references to the corresponding amount of an employer's payment (other than a redundancy payment) are references to the amount of that employer's payment so far as not in excess of the amount of the relevant redundancy payment (and so that where in consequence of section 30(2) of the Redundancy Payments Act 1965 or section 40(2) of the said Act of Northern Ireland, there is no relevant redundancy payment, the corresponding amount of the employer's payment is nil),

(b)" relevant redundancy payment" shall be construed in accordance with paragraph 8 of Schedule 5 to the Redundancy Payments Act 1965 or paragraph 8 of Schedule 6 to the said Act of Northern Ireland,

and a source of income is " within the charge to " income tax or corporation tax if that tax is chargeable on the income arising from it, or would be so chargeable if there were any such income.

(8)In subsection (1) above the reference to tax under Schedule E does not include a reference to tax under section 37 of the Finance Act 1960 (which relates only to sums exceeding a limit of £5,000 or more) and accordingly payments exempted by subsection (1) above may be taken into account under that section.

(9)This section shall apply as respects payments made on or after 6th December 1965 (which is the appointed day under the Redundancy Payments Act 1965 and the said Act of Northern Ireland), and as respects tax for past years of assessment and profits tax chargeable accounting periods, and the reference in subsection (3) of this section to section 57 of the Finance Act 1965 includes a reference to section 425 of the Income Tax Act 1952 as extended by section 438 of that Act and section 69 of the Finance Act 1960 (all of which are repealed by the Finance Act 1965).

39Cancellation of tax advantages from certain transactions in securities

(1)For the purposes of the definition of tax advantage in section 43 (4) (g) of the Finance Act 1960 it shall be assumed that a person who might have received from a company any dividend or other distribution (as defined for the purposes of the Corporation Tax Acts) would have borne the income tax chargeable under Schedule F which the company would have had to account for under section 47(3) of the Finance Act 1965 in respect of the distribution, and an assessment under section 28(3) of the Finance Act 1960 to counteract a tax advantage consisting of the avoidance or reduction of an assessment to income tax which would be payable by a company under the said section 47(3) in respect of a distribution may be made under Case VI of Schedule D on a person other than the company, and may be so made in addition to any assessment to counteract a tax advantage in respect of surtax.

(2)An assessment so made on a person other than the company may be of an amount arrived at without regard to any set off to which the company would have been entitled under Schedule 12 to the Finance Act 1965.

(3)After paragraph (2)(d) in the said section 28 there shall be added the following paragraph—

(e)in connection with the transfer directly or indirectly of assets of a company to which paragraph (d) above applies to another such company, or in connection with any transaction in securities in which two or more companies to which paragraph (d) above applies are concerned, the person in question receives non-taxable consideration which is or represents the value of assets available for distribution by such a company, and which consists of any share capital or any security (as defined by paragraph 7(1) of Schedule 11 to the Finance Act 1965) issued by such a company.

(4)So far as the paragraph (e) added to the said section 28(2) by subsection (3) above relates to share capital other than redeemable share capital, it shall not apply unless and except to the extent that the share capital is repaid (in a winding-up or otherwise), and where the said section 28 applies to a person by virtue of the said paragraph (e) on the repayment of any share capital any assessment to tax under subsection (3) of the said section 28 shall be an assessment to tax for the year in which the share capital is repaid.

(5)Any notice or notification under subsection (3) or (4) of the said section 28, or under section 29(b) of the Finance Act 1960, concerning the application of the said section 28 to a person who has died may be given or issued to his personal representatives, and the provisions of the said section 28 relating to the making of a statutory declaration, to rights of appeal and to the giving of information shall be construed accordingly.

(6)In this section—

  • " assets available for distribution " means assets which are, or apart from anything done by the company in question would have been, available for distribution by way of dividend, or trading stock of the company,

  • " non-taxable ", in relation to a person receiving consideration, means that the recipient does not pay or bear tax on it as income (apart from the provisions of section 28 of the Finance Act 1960),

  • " share " includes stock and any other interest of a member in a company, and the references in subsection (4) above to the repayment of share capital include references to any distribution made in respect of any shares in a winding up or dissolution of the company.

(7)The amendments made by this section in sections 28 and 29 of the Finance Act 1960, and in the definition of tax advantage as it applies for the purposes of that section, shall not apply to a person in respect of any transaction or transactions in securities if they were carried out before 3rd May 1966, and if any change in the nature of any activities carried on by any person, being a change necessary in order that the tax advantage should be obtainable in consequence of the transaction or transactions, was also effected before that day, but nothing in this section shall be taken to prejudice the operation of the said section 28, without this section, in any such case.

Part VEstate Duty and Capital Gains

40Estate duty: interests limited to cease on death

(1)In the case of a death after 3rd May 1966 the provisions of this section shall apply in determining for the purposes of section 2(1)(b) of the Finance Act 1894 whether an interest in property ceased on the death of the deceased and the extent to which a benefit accrued or arose by the cesser of that interest.

(2)If the deceased had immediately before his death an interest in the property limited to cease on his death, then in determining the questions in subsection (1) above as regards that interest, any other interest in that property belonging to the deceased at his death shall be treated as if it belonged to someone other than the deceased.

(3)If immediately before the death of the deceased a number of persons were, as beneficiaries under a discretionary trust, together entitled to an interest in the property limited to cease on the death and the deceased was then one of those persons, or at some earlier time had been a beneficiary under that discretionary trust, then, in determining the questions in subsection (1) above as regards that interest, any other interest in the property which, whether as arising from the same trusts or otherwise, belongs to those who immediately before the death were the beneficiaries under the discretionary trust shall be treated as being held by persons other than those beneficiaries, and other than the deceased.

(4)For the purposes—

(a)of this section, and

(b)so far as they relate to estate duty leviable on a death after 3rd May 1966, of section 43 of-the Finance Act 1940 and section 28 of the Finance Act 1958 (disposition or determination of interest limited to cease on death, and purchase of interest in expectancy in property subject to an interest limited to cease on death),

an interest including an interest limited to cease on death shall be treated as two separate interests one of which is the interest limited to cease on death, and for the purposes of this subsection the following interests shall be deemed to include an interest limited to cease on a death—

(i)an interest enjoyed under two or more titles one of which confers an interest limited to cease on a death,

(ii)an interest so related to a death that it cannot terminate before the death, and

(iii)an interest so related to a death that, except in contingencies not related to the death, it cannot terminate before the death:

Provided that where an interest belongs to persons as beneficiaries under a discretionary trust which throughout the subsistence of that trust was such that it could not terminate before the death of the survivor of two or more persons, estate duty shall only be payable by virtue of this section in respect of the cesser of the interest on the death of that survivor.

(5)It is hereby declared that this section has effect for the purposes of estate duty not only as respects the question whether property is deemed to pass on a death but also as respects the questions—

(a)whether, in any circumstances specified in section 43 of the Finance Act 1940, property would have passed on a death or would have been deemed to be included to a particular extent in property passing on a death, and

(b)whether (as under section 28(12) of the Finance Act 1958 which relates to the purchases of interests in expectancy) in specified circumstances estate duty would have been chargeable by reason of the coming to an end of an interest in property.

(6)In this section " discretionary trust" includes a trust under which the disposition of any of the trust income is at the discretion of the trustees or of any other person.

41Restriction of exemption from estate duty for certain government securities

(1)This section has effect as respects securities which the Treasury issue or have issued before or after the passing of this Act subject to any condition authorised by section 47 of the Finance (No. 2) Act 1915 or section 22 of the Finance (No. 2) Act 1931 for an exemption from taxation so long as the securities are in the beneficial ownership of persons neither domiciled nor ordinarily resident in the United Kingdom, and this section is enacted for the purpose of preventing that exemption from enuring for the benefit of, or of the estate of, a person domiciled or ordinarily resident in the United Kingdom.

(2)Where in respect of any government securities any such exemption applies apart from this section to estate duty leviable on the death after 3rd May 1966 of a person who immediately before the death was domiciled or ordinarily resident in the United Kingdom, then, subject to the exceptions provided by the following provisions of this section.—

(a)if the exemption is subject to a condition relating to any law directed to preventing avoidance of taxation by persons domiciled, resident or ordinarily resident in the United Kingdom, the said exemption shall not apply to that estate duty, and

(b)if the exemption is not subject to any such condition, there shall be deemed for purposes of estate duty on the death to be included in the property passing at the death a sum equal to the value upon which, but for the exemption, estate duty would have been payable, and any sum so deemed to pass shall for the purposes of aggregation and of determining the persons accountable for duty be treated as having been property to which the deceased was absolutely entitled at his death,

but so far as the duty imposed by paragraph (b) above has not been paid by the deceased's personal representatives accountability for the duty shall be imposed on any person who, if the exemption had not applied to the duty, would have been accountable for it under the enactments relating to estate duty; and any payment made by the personal representatives shall for the purposes of this subsection be regarded as a payment of the duty imposed by paragraph (b) above only so far as there is no other estate duty leviable on the death for which they are accountable and which has not been paid.

(3)Subsection (2) above shall not apply where it is shown to the satisfaction of the Commissioners of Inland Revenue, or on an appeal under section 10 of the Finance Act 1894 of the court entertaining the appeal, that the circumstances in which, apart from this section, the exemption applies in respect of any government securities were not brought about for the purpose, or for purposes which include the purpose, of obtaining the benefit of the exemption directly or indirectly for, or for the estate of, a person domiciled or ordinarily resident in the United Kingdom, or for a company to which section 56 of the Finance Act 1940 (closely controlled companies) applies and in which a person domiciled or ordinarily resident in the United Kingdom has an interest; and where the circumstances in which the exemption so applies in respect of any government securities were not brought about by the deceased subsection (2) above shall not apply so as by virtue of paragraph (b) of that subsection to make the personal representatives accountable for duty or to increase the amount of duty beyond what would have been due had there been no exemption.

(4)Subsection (2) above shall not apply in respect of any government securities if no person who would be accountable for estate duty leviable on the death on the government securities on the assumption that the exemption did not apply in respect of those government securities is a person domiciled or ordinarily resident in the United Kingdom or a company to which the said section 56 of the Finance Act 1940 applies.

(5)If a donee or other person being, on the assumption in subsection (4) above, contingently accountable for estate duty pre-deceases the deceased, that subsection shall apply, so far as it relates to that donee or other person, by reference to him and not by reference to his personal representatives or successors in title, and according to where he was domiciled or ordinarily resident at his death.

(6)If the persons who would, on the assumption in subsection (4) above, be so accountable consist of or include trustees under a settlement created before the death, whether or not subsisting at the death, subsection (4) above shall not have effect but subsection (2) above shall not apply in respect of the government securities if and to the extent that it is shown to the satisfaction of the Commissioners of Inland Revenue, or on an appeal under section 10 of the Finance Act 1894 of the court entertaining the appeal, that the burden of the duty, having regard to interests subsisting immediately after the death, would be borne by any person who is neither domiciled nor ordinarily resident in the United Kingdom, and for the purposes of this subsection interests in income, interests in capital, interests in possession and interests in reversion shall all be taken into account.

(7)If interests under a trust subsisting at the death fall to be taken into account under subsection (6) above, and all interests in the trust other than reversionary interests are interests contingent on the exercise of the discretion of any of the trustees or of any other person, subsection (2) above shall not be displaced by subsection (6) if any of the persons interested in the trust is domiciled or ordinarily resident in the United Kingdom.

(8)Subsection (6), and not subsection (4), above shall apply if the persons who would, on the assumption in subsection (4) above be so accountable consist of or include a company to which the said section 56 of the Finance Act 1940 applies, and the assumptions made in the said section 56(1) as to the company holding its assets in trust shall be made for the purposes of subsection (6) above, taking the interests in the company as they subsisted immediately before the death ; and similarly where under subsection (6), with or without this subsection, the burden falling on any person who is a company to which the said section 56 applies is in question, the same assumptions shall be made as respects the company.

(9)Nothing in subsections (4) to (8) above shall prevent subsection (2) above from applying in respect of any government securities settled under a settlement revocable in whole or in part at any time after the death of the deceased person at the instance of any person.

(10)Section 8(4) of the Finance Act 1894 (which, where an executor is not accountable for estate duty, renders the beneficiaries and others accountable therefor) shall apply as if the words referring to the executor not being accountable were omitted both for the purposes of accountability for estate duty leviable by virtue of this section and also for the purposes of this section as it relates to the persons who would be accountable for estate duty on the assumptions in subsections (2), (4) and (6) of this section.

(11)For the purposes of this section—

(a)the reference in subsection (3) of this section to a company to which section 56 of the Finance Act 1940 applies, and in which a person domiciled or ordinarily resident in the United Kingdom has an interest, shall be determined on the assumptions made in the said section 56(1) as to the company holding its assets in trust,

(b)the reference in subsection (7) of this section to interests contingent on the exercise of a discretion include references to interests, whether in capital or income, which are affected by the exercise of a discretion in favour of some person other than the person entitled to the interest.

42Gifts inter vivos, etc.: relief from estate duty and other tax

(1)If any property comprised in a gift inter vivos, and not settled by the gift, is deemed for the purposes of estate duty to pass on a death and capital gains tax or corporation tax is chargeable on a chargeable gain accruing on a disposal by the donee or his personal representatives of an asset which is for the time being comprised in the gift, and which has not been settled by the donee, being a disposal—

(a)effected before the death, and

(b)if the principal value of the property is to be ascertained at an earlier time, effected at or before that earlier time,

the principal value of the property for the purposes of estate duty on the death shall be reduced by the amount of that tax, and that reduction shall be made before any reduction of that value under section 64 of the Finance Act 1960 (graduation of charge by reference to period between gift and death).

(2)If any property ceasing to be settled property is by virtue of subsection (8) proviso or subsection (12) proviso of section 38 of the Finance Act 1957 to be treated as comprised in a gift inter vivos deemed for purposes of estate duty to pass on a death, or as the case may be as comprised in property in which an interest within section 43 of the Finance Act 1940 subsisted, and capital gains tax is chargeable on a chargeable gain accruing on the disposal under section 25(3) of the Finance Act 1965 deemed to be effected by the trustee of the settlement on the occasion of the property ceasing to be settled property, the principal value of the property for the purposes of estate duty on the death shall be reduced by the amount of that tax, and that reduction shall be made before any reduction of that value under section 64 of the Finance Act 1960.

(3)Where—

(a)an asset comprised in a gift inter vivos is deemed for purposes of estate duty (including estate duty in Northern Ireland) to pass on a death, and at the time of the death the asset is owned by the donee or is property settled by the gift, or property which by virtue of section 38(9) of the Finance Act 1957 is treated for the purposes of that section as property settled by the gift, and

(b)the principal value of the asset for the purposes of estate duty on the death (without any reduction under subsection (1) above and without any reduction under section 64 of the Finance Act 1960) exceeds the sums within paragraphs (a) and (b) of paragraph 4(1) of Schedule 6 to the Finance Act 1965 which, if the donee had disposed of the asset at the time of the death, would have been allowable in computing the amount accruing on that disposal,

a part of any estate duty payable in respect of that asset on the death shall be treated for the purposes of Part III of the Finance Act 1965 as if it were an amount of expenditure incurred by the donee on the asset and falling within the said paragraph 4(1)(b); and that part shall be the proportion of the duty which the said excess bears to the said principal value.

(4)References in this section to any amount of capital gains tax or corporation tax are references to the amount which would not have been payable if the relevant asset had not been disposed of, and, if any part of the chargeable gain accruing on a disposal within subsection (1) or subsection (2) of this section is not chargeable to capital gains tax or corporation tax in the year of assessment or accounting period in which it accrues because of relief for losses accruing in that or any earlier year or accounting period, the amount of tax in respect of that part of the chargeable gain shall be the tax which would have been charged on that part of the gain if it had been the only gain accruing in the year or accounting period and had all been chargeable.

(5)This section has effect as respects capital gains tax for the year 1965-66 and later years of assessment and applies in relation to deaths and disposals at any time before or after the passing of this Act.

43Capital gains

Schedule 10 to this Act (Part I of which contains amendments of the enactments relating to chargeable gains, including amendments relating to life interests in settled property, the transfer of a business on retirement, compulsory acquisitions of parts of holdings of land and insolvents' assets, and Part II of which contains a corresponding provision for insolvents' assets subject to tax on short-term capital gains) shall have effect.

Part VISelective Employment Tax

44Selective employment tax

(1)Subject to subsection (2) of this section, in respect of each contribution week beginning on or after 5th September 1966, an employer shall be liable, in respect of each person in respect of whom the employer is liable to pay an employer's insurance contribution for that week, to pay a tax (to be known as the selective employment tax and hereafter in this section and in Schedule 11 to this Act referred to as " the tax ") of the following amount, namely—

(a)if that person is a man over the age of eighteen, twenty five shillings ; or

(b)if that person is a woman over the age of eighteen, twelve shillings and sixpence ; or

(c)if that person is a boy under the age of eighteen, twelve shillings and sixpence ; or

(d)if that person is a girl under the age of eighteen, eight shillings.

(2)Where an employer's insurance contribution in respect of any person for any contribution week is reduced by virtue of regulations made or having effect as if made—

(a)under section 99 of the National Insurance Act 1965 (which relates to Her Majesty's forces) or under that section as applied for the purposes of Northern Ireland legislation by regulations made by the Joint Authority under section 104(6) of that Act; or

(b)under section 100 of that Act or section 95 of the National Insurance Act (Northern Ireland) 1966 (which relate to mariners and airmen),

the tax shall not be payable in respect of that person for that week.

(3)Any amount payable by way of the tax shall be collected together with employer's insurance contributions and—

(a)in so far as collected in Great Britain, shall be paid by the Minister of Pensions and National Insurance into the Exchequer at such times as the Treasury may direct;

(b)in so far as collected in Northern Ireland, shall be paid by the Ministry of Health and Social Services for Northern Ireland into the Exchequer of Northern Ireland at such times as the Ministry of Finance for Northern Ireland may direct.

(4)The expenses of the Minister of Pensions and National Insurance and of any other department of Her Majesty's Government in the United Kingdom (except the Postmaster General) incurred for the purposes of this section shall be defrayed out of moneys provided by Parliament:

Provided that so much of the sums payable into the Exchequer under subsection (3) (a) of this section as the Treasury may determine to be equal to the aggregate of the said expenses and any such amounts as are mentioned in section 85(5) of the National Insurance Act 1965 (which relates to liabilities for pensions and other payments and to the use of Crown premises), in so far as those amounts are determined by the Treasury to be attributable to the execution of this section, may be treated as if they were receipts falling within section 2 of the Public Accounts and Charges Act 1891 and may be directed to be appropriated in aid accordingly.

(5)For the purposes of payments by the Minister of Pensions and National Insurance to the Postmaster General under section 85(2) of the National Insurance Act 1965, work done by the Postmaster General in the execution of this section shall be treated as done in the execution of the said Act of 1965; and in estimating the expenses referred to in subsection (4) of this section there shall be included in the expenses of that Minister the amounts of any such payments in so far as those amounts are determined by the Treasury to be attributable to the execution of this section.

(6)The provisions of Schedule 11 to this Act shall have effect for the purposes of this section.

(7)Subject to subsection (2) of this section, this section and the said Schedule 11 shall apply in the case of persons employed by or under the Crown in like manner as if the employer were a private person.

(8)For the purposes of section 6 of the Government of Ireland Act 1920, this section and the said Schedule 11 shall be deemed to be contained in an Act passed before the appointed day.

(9)In this section and the said Schedule 11, the following expressions have the following meanings respectively, that is to say—

  • " employer's insurance contribution " means a contribution, other than a graduated contribution or a contribution as an insured person, payable by an employer under the Insurance Acts;

  • " the Insurance Acts " means—

    (a)

    in relation to Great Britain, the National Insurance Act 1965 and any enactment (whether passed before or after the passing of this Act) included therewith in any citation which uses the phrase " the National Insurance Acts " ;

    (b)

    in relation to Northern Ireland, means the National Insurance Act (Northern Ireland) 1966 and any enactment (whether passed before or after the passing of this Act) included therewith in any citation which uses the phrase " the National Insurance Acts (Northern Ireland)"; and, save where the context otherwise requires, any other expressions used in this section or the said Schedule 11 have the same meanings, in their application to Great Britain, as in the said Act of 1965 or, in their application to Northern Ireland, as in the said Act of 1966.

Part VIIMiscellaneous

45Harbour reorganisation schemes: corporation tax and stamp duty

(1)Where, after the passing of this Act, the trade of any body corporate other than a limited liability company is transferred to a harbour authority by or under a certified harbour reorganisation scheme which provides also for the dissolution of the transferor—

(a)for the purposes of the Corporation Tax Acts, the trade shall not be treated as permanently discontinued, nor shall a new trade be treated as set up and commenced ;

(b)the transferee shall be entitled to relief from corporation tax under section 58(1) of the Finance Act 1965, as for a loss sustained by it in carrying on the transferred trade or any trade of which it comes to form part, for any amount which, if the transferor had continued to carry it on, would have been available to the transferor for carry forward against chargeable profits of succeeding accounting periods, but subject to any claim made by the transferor under section 58(2) of that Act; and

(c)Schedule 12 to this Act (which contains further provisions as to the application of the Corporation Tax Acts) shall also have effect.

(2)Where, after the passing of this Act, a part only of such a trade is transferred to a harbour authority by or under a certified harbour reorganisation scheme, and the transferor continues to carry on the remainder of the trade, or any such trade is, by or under a certified harbour reorganisation scheme which provides also for the dissolution of the transferor, transferred in parts to two or more harbour authorities, the provisions of paragraphs (a) and (b) of the foregoing subsection and of Schedule 12 to this Act shall apply as if the transferred part, or each of the transferred parts, had been at all times a separate trade.

(3)Where a part of any trade is to be treated by virtue of subsection (2) above as having been a separate trade over any period there shall be made any necessary adjustments of accounting periods, and such apportionments as may be just of receipts, expenses, allowances or charges.

(4)Where the trade carried on by any body corporate was, by or under a certified harbour reorganisation scheme, transferred to a harbour authority in the year 1965-66—

(a)the change effected by the transfer shall be treated as one in respect of which the conditions specified in section 17(1) of the Finance Act 1954 (company reconstructions etc. without change of ownership) were satisfied, and Schedule 3 to that Act shall apply accordingly ;

(b)for all purposes of corporation tax the transferee and all other persons affected shall be treated as if the transferee had carried on the trade from the end of the basis period for that year of the trade as carried on by the transferor, and as if anything done to or by the transferor in carrying on the trade since the end of that period had been done to or by the transferee; and

(c)subsection (1)(b) above, and paragraph 4 of Schedule 12 to this Act, shall apply.

(5)Where a certified harbour reorganisation scheme contains provision for the transfer of an undertaking, or of any other description of property, to a harbour authority, then, in considering whether any and if so what duty is payable under section 12 of the Finance Act 1895 (which relates to the stamp duty payable in connection with certain statutory conveyances), the consideration for the transfer shall be left out of account; and no stamp duty shall be payable on any contract or agreement for any such transfer if the contract or agreement is conditional on the making and certification of a harbour reorganisation scheme.

(6)In this section—

  • " harbour authority" has the same meaning as in the Harbours Act 1964;

  • " harbour reorganisation scheme" means any statutory provision providing for the management by a harbour authority of any harbour or group of harbours in the United Kingdom, and " certified ", in relation to any harbour reorganisation scheme, means certified by a Minister of the Crown or Government department as so providing with a view to securing, in the public interest, the efficient and economical development of the harbour or harbours in question;

  • " limited liability company " means a company having a limit on the liability of its members ;

  • " statutory provision " means any enactment, or any scheme, order or other instrument having effect under an enactment, and includes an enactment confirming a provisonal order; and in this section and in Schedule 12 to this Act " transferor ", in relation to any trade, means the body from whom the trade is transferred, whether or not the transfer is effected by that body.

(7)This section, except so far as it relates to stamp duties, shall be construed as one with the Corporation Tax Acts.

46Stamping of contract notes etc.

(1)The Commissioners may enter into an agreement with any person by whom instruments chargeable with stamp duty by virtue of section 77 or 79 of the Finance (1909-10) Act 1910 are made and executed in the course of that person's business whereby—

(a)that person pays a sum to the Commissioners on account of the amounts of stamp duty which will become chargeable on such instruments thereafter made and executed by or on behalf of that person without the duty thereon being denoted in accordance with section 78(4) of that Act; and

(b)in substitution for the requirements of the said section 78(4), but subject to—

(i)compliance with such terms and conditions as the Commissioners may think proper to cause to be contained in the agreement; and

(ii)the aggregate of those amounts not exceeding the sum so paid on account,

any such instrument thereafter so made and executed may be marked by or on behalf of that person with such indication of the payment of stamp duty and the amount thereof as the Commissioners may require.

(2)Any such instrument marked in accordance with any such agreement as aforesaid shall be treated as duly stamped for the purposes of subsection (2) of section 78 of the said Act of 1910; and the reference in subsection (3) of that section to the provisions of that section shall be construed as a reference to those provisions as modified by any such agreement.

(3)Where, under any such agreement as aforesaid, a sum has been paid to the Commissioners in accordance with subsection (1)(a) of this section by the other party to the agreement, the Commissioners may, on a claim made not later than two years after that sum was so paid, repay so much of that sum as they are satisfied can no longer be required for discharging any future liability of that other party to pay amounts of stamp duty.

(4)Except in so far as the context otherwise requires, any reference in sections 9 and 10 of the Stamp Duties Management Act 1891 (which relate to allowances for spoiled stamps) to a stamp shall include a reference to any such indication of the payment and amount of stamp duty as is referred to in subsection (1)(b) of this section.

47Stamp duty on life policies not exceeding two years

(1)The maximum amount chargeable by way of stamp duty on any policy of life insurance made on or after 1st August 1966 for a period not exceeding two years shall be sixpence.

(2)For the purposes of this section, a policy shall be treated as made for a period exceeding two years if it contains any provision whereby it may become available for a period exceeding two years in all.

(3)Where, at any time after the making of a policy on which the duty chargeable would, but for subsection (1) above, have exceeded sixpence, the policy is varied so that it becomes or may become available for a period exceeding two years in all, the policy shall become chargeable with the same duty as would have been chargeable if it had been made on the date of the variation for a period exceeding two years, and may be stamped accordingly, without penalty, at any time within thirty days after that date.

48Licence not required to deal in postage stamps

(1)A licence under section 3 of the Stamp Duties Management Act 1891 shall not be required by any person to deal in postage stamps, and accordingly in that Act—

(a)any reference in section 3, 4 or 6 to stamps shall be construed as a reference to stamps other than postage stamps;

(b)in relation to postage stamps, any reference in section 12, 17(2) or 17(3) to a person duly licensed to deal in stamps shall be construed as a reference to a person lawfully dealing in postage stamps;

(c)in relation to postage stamps, section 18(1) shall have effect as if the words " or being or having been licensed to deal in stamps " were omitted.

(2)In this section, the expression " postage stamp " means a stamp within the meaning of the said Act of 1891 for denoting an amount of postage, whether or not it can also be used for revenue purposes.

(3)This section shall come into force at the expiration of the period of three months beginning with the date of the passing of this Act.

49Power to inspect books of agents concerned with foreign dividends etc.

(1)Subject to subsection (3) of this section, the Commissioners of Inland Revenue may by notice in writing served on any chargeable person within the meaning of Part III of Schedule 8 to the Income Tax Act 1952 (persons entrusted with or obtaining, payment of foreign dividends etc., or concerned in certain dealings in coupons) require him, within such time as may be specified in the notice, to make available at his premises for inspection by an officer authorised by the Commissioners all such books and other documents in the possession or control of that person as the officer may reasonably require for the purpose of determining whether any accounts delivered to the Commissioners by that person under that Schedule are correct and complete.

(2)Part III of the Finance Act 1960 (penalties) shall have effect as if subsection (1) above were among the provisions specified in column 2 of Schedule 6 to that Act.

(3)The Commissioners may grant a certificate exempting any chargeable person from the foregoing provisions of this section, and while the certificate is in force the powers conferred by those provisions shall not be exercisable in relation to that person; and any such certificate may be revoked at any time by the Commissioners, and may contain such terms and conditions as they think proper.

50Information relating to stock jobbers' transactions

(1)The Board may exercise the powers conferred by this section as respects, and in connection with, any business which is, or has been, carried on by a jobber or dealing broker whose liability to tax in respect of the business is determined on the footing that any excess of his payments in respect of interest on securities over his receipts in respect thereof, being payments made or receipts accrued in pursuance of a contract for the sale or purchase of the securities, is to be treated for all the purposes of the Income Tax Acts or the Corporation Tax Acts as an annual payment made by him.

(2)With a view to obtaining information about transactions in the course of a business within subsection (1) above, the Board may serve on the jobber or dealing broker by whom the business is or has been carried on a notice requiring him to make available within a time specified in the notice, for inspection by an inspector or other officer of the Board, all such books, accounts and other documents in his possession or power as may be specified or described in the notice, being books, accounts or other documents which in the opinion of the Board contain or may contain information directly or indirectly relating to any such transactions.

(3)The Board may serve on any broker a notice requiring him to make available within a time specified in the notice, for inspection by an inspector or other officer of the Board, all such books, accounts or other documents in his possession or power as may be specified or described in the notice, being books, accounts or other documents which in the opinion of the Board contain or may contain information relating directly or indirectly to transactions in the course of a business within subsection (1) above.

(4)The Board may by notice in writing require—

(a)a person, other than a broker, who has directly or in directly received from a jobber or dealing broker any payment made by the jobber or dealing broker in the course of a business within subsection (1) above, being a payment treated by the jobber or dealing broker as made in respect of interest on securities, 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, any other person and, if so, to furnish the name and address of that other person, or

(b)a person who has directly or indirectly paid to a jobber or dealing broker any sum constituting a receipt by him in the course of a business within subsection (1) above, being a receipt treated by the jobber or dealing broker as accruing in respect of interest on securities, 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, any other person and, if so, to furnish the name and address of that other person.

(5)Section 250(4) of the Income Tax Act 1952 (power to obtain information from nominee shareholders) shall apply for the purpose of obtaining (from any persons to whom that section applies, whether brokers or jobbers or not) information directly or indirectly relating to any transactions in the course of a business within subsection (1) above, and shall so apply as if for references to shares in a company there were substituted references to securities.

(6)The Board may not exercise their powers under the foregoing provisions of this section for the purpose of obtaining information relating to transactions in any income tax year of assessment ending more than six years before the service of the notice, but, subject to the foregoing provisions of this subsection, the transactions in respect of which they may exercise those powers shall include transactions before the passing of this Act.

(7)Part III of the Finance Act 1960 (penalties) shall have effect as if subsections (2), (3) and (4) of this section were included in the second column of Schedule 6 to that Act.

(8)In this section—

  • " the Board " means the Commissioners of Inland Revenue,

  • " broker" means a member of a stock exchange in the United Kingdom other than a jobber,

  • " dealing broker", in relation to any sale of securities, means a member of a stock exchange in the United Kingdom, other than the London Stock Exchange, who is recognised by the committee of his exchange as carrying on the business of a dealer and authorised by them to deal in those securities,

  • " jobber " means a member of the London Stock Exchange who is recognised by the committee thereof as carrying on the business of a jobber.

" securities " includes shares, and " shares ", except where the context otherwise requires, includes stock, and references to interest include references to dividends.

51Members of Parliament of Northern Ireland: Pension Fund and annuity premiums

(1)Subsections (2) and (3) below shall have effect with respect to the Members' Contributory Pension (Northern Ireland) Fund constituted under section 3 of the Ministerial Salaries and Members' Pensions Act (Northern Ireland) 1965, and sums payable thereout under section 12(1) of that Act (transfer to other pension schemes of sums representing value of accrued pension rights).

(2)Section 385(2) of the Income Tax Act 1952 (exemption from tax in respect of income of the House of Commons Members' Fund) shall apply in relation to the Fund, and accordingly the Fund shall be included among those referred to in section 36(2) of the Finance Act 1965 (by virtue of which, in the case of funds the income of which is exempt from tax under enactments which include the said section 385, gains accruing from the acquisition and disposal of assets are not chargeable gains). This subsection shall have effect for the year 1965-66 as well as subsequent years of assessment.

(3)Any sum payable out of the Fund as mentioned in subsection (1) above shall be treated for the purposes of the Income Tax Acts as having been paid in commutation of an annuity payable by a superannuation fund within the meaning of section 379 of the Income Tax Act 1952 (approved superannuation funds), and the Fund shall be treated as such a superannuation fund for the purposes of any regulations under that section.

(4)For the purposes of Part III of the Finance Act 1956 (retirement and other annuities), so much of the salary of the holder of any office to which this subsection applies who is also a Member of the House of Commons of Northern Ireland as is equal to the salary to which, pursuant to any Resolution of that House relating to the remuneration of Members, he would be entitled if he did not hold that office shall be treated as remuneration from the office of Member, and not from the office to which this subsection applies, and shall accordingly be treated for the purposes of Part I of Schedule 3 to that Act as pensionable emoluments from the office of Member. The offices to which this subsection applies are those of Chairman of Ways and Means of the House of Commons of Northern Ireland and Attorney General for Northern Ireland.

52Amendments of Sugar Act 1956

(1)No surcharge, surcharge repayment, distribution payment or distribution repayment shall be payable under the Sugar Act 1956 in respect of sugar or invert sugar used in the manufacture of concentrated cane juice, partly inverted, of the kind known as high test, invert, or fancy molasses.

(2)Section 8 of that Act (which, as amended by Schedule 5 to the Finance Act 1962, provides for surcharge repayments by reference to the circumstances in which drawback of sugar duty was allowable immediately before 10th April 1962) shall have effect as if, immediately before that day, section 218(1)(c) of the Customs and Excise Act 1952 (which provided for drawback on sugar, etc., used in the brewing of beer warehoused for exportation or for use as stores) had been amended by substituting, for the words from

usedto the end, the words " used in the manufacture of beer exported, shipped as stores, or warehoused for exportation or for use as stores ".

53Short title, construction, extent and repeals

(1)This Act may be cited as the Finance Act 1966.

(2)In this Act Part I shall be construed as one with the Customs and Excise Act 1952, and in that Part " the Act of 1952 " is that Act; Part II shall be construed as one with the Income Tax Acts; Part III shall be construed as one with the Corporation Tax Acts; Part IV, so far as it relates to the Corporation Tax Acts, shall be construed as one with those Acts, so far as it otherwise relates to income tax, shall be construed as one with the Income Tax Acts and so far as it relates to the profits tax shall be construed as one with the enactments relating to the profits tax ; Part V so far as it relates to estate duty shall be construed as one with the Finance Act 1894; and so much of Part VII as relates to stamp duties shall be construed as one with the Stamp Act 1891.

(3)Any reference in this Act to any other enactment shall, except so far as the context otherwise requires, be construed as a reference to that enactment as amended or applied by or under any other enactment, including this Act.

(4)Except as otherwise expressly provided, such of the provisions of this Act as relate to matters in respect of which the Parliament of Northern Ireland has power to make laws shall not extend to Northern Ireland.

(5)This Act, in so far as it affects the operation of the Sugar Act 1956, shall extend to the Isle of Man.

(6)This Act, in so far as it amends the enactments relating to friendly societies, shall extend to the Channel Islands and the Isle of Man.

(7)The enactments mentioned in Schedule 13 to this Act are hereby repealed to the extent mentioned in the third column of that Schedule, but subject to any provision in relation thereto made at the end of any Part of that Schedule.

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