Finance Act 1984 (c. 43)

SCHEDULES

Section 70.

SCHEDULE 14 BENEFICIARY'S LIABILITY FOR TAX ON GAINS OF NON-RESIDENT TRUSTEES

Interpretation

1 (1) In this Schedule—

• "attributed gain", in relation to the beneficiary, means the chargeable gain which, as mentioned in paragraph (b) of subsection (1) of the principal section, is treated as accruing to him;

• "the beneficiary" means the beneficiary referred to in that paragraph and paragraph (c) of that subsection ;

• " claim " means a claim under paragraph 2(1) below ;

• " close relative ", in relation to any person, means his spouse or a child or remoter descendant of his ;

• "ineligible gain" shall be construed in accordance with paragraph 2(3) below;

• " offshore income gain " has the same meaning as in Chapter VII of Part II of this Act;

• " the principal Act" means the [1979 c. 14.] Capital Gains Tax Act 1979 ;

• " the principal section " means section 70 of this Act;

• " related settlement" shall be construed in accordance with paragraph 5(6) below;

• " relevant benefit" shall be construed in accordance with paragraph 5 below; and

• " the relevant year of assessment", in relation to an attributed gain, means the year of assessment in which the gain is treated as accruing to the beneficiary.

(2) Subject to subsection (4) of the principal section, section 83 of the [1981 c. 35.] Finance Act 1981 (meaning of "capital payment" etc.) applies for the purposes of this Schedule as it applies for the purposes of sections 80 to 82 of that Act.

(3) In any case where the beneficiary is a married woman, any reference in the following provisions of this Schedule to the payment of capital gains tax by the beneficiary shall be construed as including a reference to the payment by her husband of capital gains tax which, under subsection (1) of section 45 of the principal Act, is assessed and charged on him.

Claims for postponement of tax

2 (1) Subject to sub-paragraph (3) below, in a case falling within the principal section, the provisions of this Schedule have effect to determine whether, on a claim made to the Board, payment of any of the capital gains tax referable to an attributed gain may be postponed and, if so, to what extent and for how long.

(2) A claim must be made before 1st July 1985 or, if it is later, the expiry of the period of thirty days beginning with the date of the issue of a notice of assessment requiring the payment of an amount of capital gains tax assessed, in whole or in part, by reason of an attributed gain to which the claim relates.

(3) The provisions of this Schedule do not have effect to allow postponement of the payment of the capital gains tax referable to an attributed gain if the capital gains tax chargeable on the gain—

(a) has previously been postponed under section 17(4)(b) of the principal Act (pre-6th April 1965 settlements); or

(b) subject to sub-paragraph (4) below, carries interest, by virtue of section 88(1) of the [1970 c. 9.] Taxes Management Act 1970 (interest on tax recovered to make good tax lost due to fraud, wilful default or neglect), from the date on which the tax ought to have been paid until payment;

and an attributed gain falling within paragraph (a) or paragraph (b) above is in this Schedule referred to as an ineligible gain.

(4) Sub-paragraph (3)(b) above does not apply where the tax carries interest by reason only of the neglect of any person and that neglect is remedied before 1st July 1985.

(5) In relation to a claim, any reference in this Schedule to an attributed gain to which the claim relates is a reference to such a gain—

(a) which is specified in the claim, and

(b) which is not an ineligible gain, and

(c) in respect of which the claim is not out of time by virtue of sub-paragraph (2) above,

and any reference to the settlement to which the claim relates is a reference to the settlement under which the beneficiary is a beneficiary and to the trustees of which accrued the chargeable gain which gives rise to the attributed gain or gains to which the claim relates.

(6) In a case where a claim relates to attributed gains accruing to the beneficiary by virtue of more than one settlement, the provisions of this Schedule shall have effect as if there were separate claims, each relating to the attributed gain or gains accruing by virtue of a single settlement

(7) Without prejudice to the application of sub-paragraph (2) above in a case where the personal representatives of the beneficiary receive a notice of assessment requiring the payment by them of an amount of capital gains tax assessed, in whole or in part, by reason of an attributed gain, if—

(a) before his death the beneficiary or, where paragraph 1(3) above applies, the beneficiary's husband received a notice of assessment requiring the payment by him of such an amount of capital gains tax, and

(b) at the time of his death the period within which he might make a claim in respect of any of the tax assessed by that notice had not expired,

a claim by his personal representatives relating to that tax may be made at any time before the expiry of the period of six months beginning on the date of the death of the beneficiary or, as the case may be, her husband (or, if it is later, before 1st July 1985).

(8) In relation to any claim by the personal representatives of the beneficiary, references in this Schedule to the postponement of the payment of any tax shall be construed as references to the discharge of that tax and, accordingly, paragraphs 11 and 12 below do not apply where a claim is made by the personal representatives.

Tax referable to attributed gains

3 Any reference in this Schedule to the tax referable to an attributed gain is a reference to the amount determined by multiplying the total capital gains tax on chargeable gains accruing to the beneficiary in the relevant year of assessment by a fraction—

(a) of which the numerator is the amount of the attributed gain; and

(b) the denominator is the total of the chargeable gains accruing to the beneficiary in the relevant year of assessment.

Initial calculations relevant to tax which may be postponed

4 (1) Where a claim is made, the determination referred to in paragraph 2(1) above shall, in the first instance, be made (in accordance with paragraph 6 below) by reference to—

(a) the amount defined in sub-paragraph (4) below as the unpaid tax;

(b) the amount defined in sub-paragraph (5) below as the tax already paid; and

(c) the aggregate value of any relevant benefits which, by virtue of paragraph 5 below, fall to be taken into account in relation to the claim.

(2) Subject to sub-paragraph (3) below, in this paragraph and paragraph 5 below "the base year" means the year of assessment which precedes the relevant year of assessment in relation to the attributed gain or, as the case may be, the earliest of the attributed gains to which the claim relates.

(3) Where the relevant year of assessment referred to in sub-paragraph (2) above is the year 1965-66, the base year is also that year of assessment.

(4) In relation to a claim, " the unpaid tax " means the amount of tax—

(a) which is referable to the attributed gain (or attributed gains) to which the claim relates; and

(b) which remains unpaid at the date of the claim.

(5) In relation to a claim, " the tax already paid" means the amount of tax—

(a) which has been paid at the date of the claim, excluding any tax which was so paid, or is or was otherwise borne, by the trustees of the settlement to which the claim relates; and

(b) which is referable to any attributed gains—

(i) which have accrued to the beneficiary by virtue of the settlement to which the claim relates; and

(ii) for which the relevant year of assessment is, or is later than, the base year ; and

(iii) which are not ineligible gains.

Relevant benefits

5 (1) The provisions of this paragraph have effect to determine what are the relevant benefits to be taken into account (as mentioned in paragraph 4(1)(c) above) in relation to a claim; and in the following provisions of this paragraph "the calculation period" means the period beginning at the beginning of the base year and ending on 9th March 1981.

(2) Subject to sub-paragraph (3) below, if, under or by reference to the settlement to which the claim relates or a related settlement, the beneficiary received a capital payment from the trustees of the settlement—

(a) at any time in the calculation period, or

(b) after the end of that period but before 6th April 1984, in so far as that payment represented a chargeable gain which, before 6th April 1981, accrued to the trustees of the settlement to which the claim relates,

the amount of that capital payment is a relevant benefit.

(3) In any case where, apart from this sub-paragraph, sub-paragraph (2) above would bring into account, as a relevant benefit in relation to a claim, a capital payment received under or by reference to a related settlement, and either—

(a) on a claim relating to the related settlement, the payment falls to be taken into account under this paragraph as a relevant benefit, or

(b) it appears to the Board to be likely that the payment will fall to be so taken into account on a claim relating to the related settlement,

the payment shall not be taken into account as a relevant benefit in relation to the claim referred to in sub-paragraph (2) above except to the extent that it constitutes a surplus benefit by virtue of paragraph 6(5) below.

(4) If, at any time in the period beginning at the beginning of the base year and ending at the beginning of the year of assessment in which the claim is made, the beneficiary disposed of his interest in the settlement to which the claim relates in circumstances such that, by virtue of section 58(1) of the principal Act, no chargeable gain could accrue on the disposal, then the amount or value of the consideration for the disposal is a relevant benefit.

(5) Where the disposal referred to in sub-paragraph (4) above was made before 6th April 1984, the reference in that sub-paragraph to the consideration for the disposal shall be construed as a reference only to such consideration (if any) as was actually given for the disposal.

(6) For the purposes of this Schedule, a settlement is a related settlement in relation to the settlement to which a claim relates if, by the exercise in the base year or later (whether before or after the making of the claim) of a power conferred by one of the settlements, or by the combination of such an exercise and any other transactions, property of any description forming part of the settled property of one of the settlements is at any time appointed to the other settlement or otherwise dealt with so as to increase the value of the settled property of the other settlement.

The basic rules as to postponement

6 (1) Unless on a claim the aggregate of—

(a) the unpaid tax (as defined in paragraph 4(4) above), and

(b) the tax already paid (as defined in paragraph 4(5) above),

exceeds 30 per cent. of the aggregate of the relevant benefits referred to in paragraph 4(1)(c) above, there is no postponement of the payment of any of the capital gains tax referable to the attributed gains to which the claim relates.

(2) Subject to the following provisions of this Schedule, the amount of capital gains tax payment of which is, on a claim, postponed by virtue of this Schedule is whichever is the smaller of—

(a) the unpaid tax ; and

(b) the amount of the excess referred to in sub-paragraph (1) above;

and, where the amount in paragraph (b) above is the smaller, payment of tax assessed for a later year shall be postponed in priority to payment of tax assessed for an earlier year.

(3) Without prejudice to paragraph 2(8) above, if at any time after a claim is made the beneficiary dies, any tax the payment of which would, by virtue of this Schedule, still be postponed at the date of his death shall be discharged on that date.

(4) Notwithstanding anything in Part IX of the [1970 c. 9.] Taxes Management Act 1970 (interest on overdue tax), where payment of an amount of capital gains tax is postponed by virtue of this Schedule none of that tax shall carry interest (or be taken to have carried interest) for any period before the time when the tax becomes payable in accordance with paragraph 11 below.

(5) In any case where, by virtue of sub-paragraph (1) above, there is on a claim no postponement of the payment of capital gains tax, there shall be determined—

(a) whether there would still be no postponement if there were left out of account all relevant benefits (if any) referable to capital payments received under or by reference to a related settlement, and

(b) if so, what is the excess of all the other relevant benefits over 3 1/3 times the aggregate of the tax referred to in paragraphs (a) and (b) of sub-paragraph (1) above,

and so much of those other relevant benefits as are referable to capital payments falling within sub-paragraph (2) of paragraph 5 above and equal (or do not exceed) that excess shall be regarded as a surplus benefit for the purposes of sub-paragraph (3) of that paragraph.

Effect of subsequent capital payments received by the beneficiary

7 (1) The provisions of this paragraph apply if—

(a) on a claim there would, in accordance with paragraph 6(2) above, be an amount of capital gains tax payment of which is postponed by virtue of this Schedule ; but

(b) before the beginning of the year of assessment in which the claim is made, the beneficiary has received from the trustees of the settlement to which the claim relates or a related settlement a capital payment which is not a relevant benefit and has not been brought into account under subsections (3) and (4) of section 80 of the [1981 c. 35.] Finance Act 1981 (new provisions as to gains of non-resident settlements) in determining whether chargeable gains or offshore income gains should be attributed to the beneficiary by reference to any trust gains for any previous year of assessment.

(2) If the amount of capital gains tax referred to in paragraph (a) of sub-paragraph (1) above exceeds 30 per cent. of the aggregate of the amount of the capital payments which fall within paragraph (b) of that sub-paragraph, then, subject to paragraph 9 below, the amount of capital gains tax payment of which is postponed by virtue of tins Schedule is an amount equal to that excess.

(3) If the amount of capital gains tax referred to in paragraph (a) of sub-paragraph (1) above is less than or equal to 30 per cent. of the aggregate of the amount of the capital payments which fall within paragraph (b) of that sub-paragraph, then there is no postponement of the payment of any of that capital gains tax.

(4) In any case where—

(a) the amount of capital gains tax referred to in sub-paragraph (1)(a) above equals or exceeds 30 per cent. of the aggregate of those capital payments falling within sub-paragraph (1)(b) above which the beneficiary has received from the trustees of the settlement to which the claim relates, and

(b) apart from this paragraph, those capital payments would fall to be brought into account under subsections (3) and (4) of section 80 of the [1981 c. 35.] Finance Act 1981 (new provisions as to gains of non-resident settlements) in determining whether chargeable gains or offshore income gains should be attributed to the beneficiary by reference to any trust gains for the year of assessment in which the claim is made,

then, as respects that year of assessment and any subsequent year, those capital payments shall be left out of account for the purposes of the said subsections (3) and (4).

(5) In any case where—

(a) the condition in sub-paragraph (4)(a) above is not fulfilled, but

(b) the condition in sub-paragraph (4)(b) above is fulfilled,

then, as respects the year of assessment in which the claim is made and any subsequent year, so much of the capital payments referred to in sub-paragraph (4) above as is equal to times the amount of capital gains tax referred to in sub-paragraph (1)(a) above shall be left out of account for the purposes of subsections (3) and (4) of section 80 of the Finance Act 1981.

(6) Where, by virtue of sub-paragraph (4) or sub-paragraph (5) above, the whole or any part of a capital payment falls to be left out of account as mentioned in that sub-paragraph,—

(a) the payment shall to the same extent be left out of account for the purposes of the application on any other occasion of any provision of paragraphs 7 to 12 of this Schedule ; and

(b) section 45 of the Finance Act 1981 (transfer of assets abroad: liability of non-transferors) shall have effect in relation to a benefit received by the beneficiary which, in whole or in part, consists of that payment as if, in the year of assessment in which the claim is made, chargeable gains equal to so much of that payment as falls to be so left out of account were, by reason of that payment, treated under section 80 of that Act as accruing to the beneficiary.

(7) Where any capital payments falling within sub-paragraph (1)(b) above which the beneficiary has received from the trustees of the settlement to which the claim relates are not such as are referred to in sub-paragraph (4)(b) above, sub-paragraph (6)(a) above shall apply to each of those payments in like manner as if it had been such a payment as is referred to in sub-paragraph (4)(b) above and the amount of it to be left out of account had been determined accordingly under sub-paragraph (4) or sub-paragraph (5) above.

8 (1) The provisions of this paragraph apply if, in a case where paragraph 7 above applies, the amount of capital gains tax referred to in sub-paragraph (1)(a) of that paragraph exceeds 30 per cent. of the aggregate of those capital payments falling within sub-paragraph (1)(b) of that paragraph which the beneficiary has received from the trustees of the settlement to which the claim relates.

(2) In the following provisions of this paragraph—

(a) the capital payments falling within sub-paragraph (1)(b) of paragraph 7 above which the beneficiary has received otherwise than from the trustees of the settlement to which the claim relates are referred to as " related payments " ; and

(b) any of those related payments which, apart from this paragraph, would fall to be brought into account as mentioned in sub-paragraph (4)(b) of paragraph 7 above is referred to as a " related section 80 payment".

(3) If sub-paragraph (2) of paragraph 7 above applies, then—

(a) as respects the year of assessment in which the claim is made and any subsequent year, any related section 80 payment shall be left out of account for the purposes of sub-paragraphs (3) and (4) of section 80 of the [1981 c. 35.] Finance Act 1981 ; and

(b) all the related payments shall be left out of account for the purposes of the application on any other occasion of any provision of paragraphs 7 to 12 of this Schedule.

(4) If sub-paragraph (3) of paragraph 7 above applies, then—

(a) as respects the year of assessment in which the claim is made and any subsequent year, so much of any related section 80 payment as is equal to 3J times the amount of capital gains tax released by that payment shall be left out of account for the purposes of subsections (3) and (4) of section 80 of the Finance Act 1981 ; and

(b) so much of each of the related payments as is equal to 3J times the amount of capital gains tax released by the payment shall be left out of account for the purposes mentioned in sub-paragraph (3)(b) above.

(5) For the purposes of sub-paragraph (4) above, the amount of capital gains tax released by a related payment shall be determined by the formula—

where—

• " A " is the capital gains tax referred to in sub-paragraph (1)(a) of paragraph 7 above ;

• " B " is an amount equal to 30 per cent. of the aggregate of those capital payments falling within sub-paragraph (1)(b) of that paragraph which the beneficiary has received from the trustees of the settlement to which the claim relates ;

• " C " is the related payment in question ; and

• " D " is the aggregate of all the related payments.

(6) Where, by virtue of sub-paragraph (3)(a) or sub-paragraph (4)(a) above, the whole or any part of a related section 80 payment falls to be left out of account as mentioned in that sub-paragraph, section 45 of the [1981 c. 35.] Finance Act 1981 shall have effect in relation to the benefit received by the beneficiary which, in whole or in part, consists of that payment as if, in the year of assessment in which the claim is made, chargeable gains equal to so much of that payment as falls to be so left out of account were, by reason of that payment, treated under section 80 of that Act as accruing to the beneficiary.

Effect of related benefits derived from payments received by close relatives of the beneficiary

9 (1) The provisions of this paragraph apply if,—

(a) on a claim, payment of an amount of capital gains tax determined in accordance with paragraph 6(2) or paragraph 7(2) above would, apart from this paragraph, be postponed by virtue of this Schedule ; and

(b) as a result of a capital payment received by a close relative of the beneficiary, there is, in accordance with paragraph 10 below, a related benefit which falls to be taken into account in relation to the claim.

(2) If the amount of capital gains tax referred to in sub-paragraph (1)(a) above exceeds 30 per cent. of the aggregate of the related benefits which fall to be taken into account in relation to the claim, then the amount of capital gains tax payment of which is postponed by virtue of this Schedule is an amount equal to that excess.

(3) If the amount of capital gains tax referred to in sub-paragraph (1)(a) above is less than or equal to 30 per cent. of the aggregate of the related benefits which fall to be taken into account in relation to the claim, then there is no postponement of the payment of any of that capital gains tax.

Related benefits

10 (1) The provisions of this paragraph have effect to determine what are, in relation to a claim, the related benefits which are to be taken into account under paragraph 9 above.

(2) If, on or after 6th April 1984 and before the beginning of the year of assessment in which the claim is made, a close relative of the beneficiary has received from the trustees of the settlement to which the claim relates or a related settlement a capital payment which has not been brought into account under subsections (3) and (4) of section 80 of the Finance Act 1981 in determining whether chargeable gains or offshore income gains should be attributed to the close relative by reference to any trust gains for any previous year of assessment, then, subject to sub-paragraphs (3) and (4) below, that capital payment is a related benefit which falls to be taken into account in relation to the claim.

(3) A capital payment falling within sub-paragraph (2) above is not a related benefit which falls to be taken into account as mentioned in that sub-paragraph to the extent that it has already been taken into account on any previous operation of sub-paragraph (4) or sub-paragraph (5) of paragraph 7 above on the occasion of a claim in respect of which the close relative himself or a close relative of his or a person whose close relative he is was the beneficiary.

(4) A capital payment falling within sub-paragraph (2) above is not a related benefit which falls to be taken into account as mentioned in that sub-paragraph if the Board so direct on the grounds that it appears likely that the payment will fall to be taken into account, either as giving rise to a relevant benefit or under paragraph 7 above, in relation to such a claim as is referred to in sub-paragraph (3) above.

(5) Sub-paragraphs (3) to (6) of paragraph 8 above shall have effect for the purposes of this paragraph—

(a) as if any reference to a provision of paragraph 7 above were a reference to the corresponding provision of paragraph 9 above ; and

(b) as if any reference to a related payment were a reference to a related benefit which falls to be taken into account as mentioned in sub-paragraph (2) above ; and

(c) as if any reference to a related section 80 payment were a reference to a related benefit which falls to be taken into account as mentioned in sub-paragraph (2) above and which, apart from this paragraph, would fall to be taken into account under sub-paragraphs (3) and (4) of section 80 of the [1981 c. 35.] Finance Act 1981 in determining whether chargeable gains or offshore income gains should be attributed to the close relative concerned by reference to any trust gains for the year of assessment in which is made the claim referred to in sub-paragraph (2) above ; and

(d) as if " B " in the formula in sub-paragraph (5) were nil; and

(e) as if any reference in sub-paragraph (6) to the beneficiary were a reference to the close relative concerned.

Time when postponed tax becomes payable

11 (1) The provisions of this paragraph apply where, as a result of a claim, payment of an amount of capital gains tax, determined in accordance with paragraphs 6 to 9 above, is postponed by virtue of this Schedule ; and, subject to sub-paragraph (6) below, any reference in the following provisions of this paragraph to postponed tax is a reference to tax the payment of which is so postponed.

(2) Postponed tax shall become payable in accordance with sub-paragraph (5) below if, at any time in the year of assessment in which the claim is made or any later year, the beneficiary disposes of his interest in the settlement to which the claim relates in circumstances such that, by virtue of section 58(1) of the principal Act, no chargeable gain could accrue on the disposal; and in sub-paragraph (5) below " the relevant consideration " means the amount or value of the consideration for such a disposal.

(3) Subject to paragraph 12 below, postponed tax shall become payable in accordance with sub-paragraph (5) below if, in the year of assessment in which the claim is made or any later year, the beneficiary or a close relative of his receives a capital payment from the trustees of the settlement to which the claim relates or a related settlement.

(4) In the following provisions of this paragraph and paragraph 12 below, any reference to a material year of assessment is a reference to one in which the beneficiary disposes of his interest as mentioned in sub-paragraph (2) above or in which sub-paragraph (3) above applies.

(5) For any material year of assessment, so much of the postponed tax as does not exceed 30 per cent. of the aggregate of—

(a) the relevant consideration in respect of any disposal in that year, and

(b) subject to paragraph 12 below, the capital payments received in that year as mentioned in sub-paragraph (3) above,

shall become payable as if it were capital gains tax assessed in respect of gains accruing in that year.

(6) If, for any material year of assessment, the amount of the postponed tax exceeds 30 per cent. of the aggregate referred to in sub-paragraph (5) above, only the excess shall continue after the end of that year to be postponed tax for the purposes of this paragraph, but without prejudice to the subsequent operation of this paragraph in relation to a later year of assessment which is a material year.

(7) Where part, but not the whole, of any postponed tax becomes payable in accordance with sub-paragraph (5) above, tax assessed for an earlier year shall be regarded as becoming so payable before tax assessed for a later year.

Balance of capital payments

12 (1) If any capital payments received in any year of assessment as mentioned in paragraph 11(3) above fall to be brought into account for that year for the purposes of subsections (3) and (4) of section 80 of the [1981 c. 35.] Finance Act 1981, those capital payments shall be disregarded for the purposes of sub-paragraph (5) or, as the case may be, sub-paragraph (6) of paragraph 11 above except to the extent that the aggregate of those payments exceeds the chargeable gains and offshore income gains which in that year are treated under the said section 80 as accruing to the beneficiary or, as the case may be, the close relative ; and any such excess is in the following provisions of this paragraph referred to as the balance of section 80 payments for that year.

(2) Subject to the following provisions of this paragraph, as respects any year of assessment subsequent to a material year of assessment for which there is a balance of section 80 payments there shall be left out of account for the purposes of subsections (3) and (4) of section 80 of the [1981 c. 35.] Finance Act 1981 so much of the capital payments as made up that balance.

(3) If paragraph 11(6) above did not apply for any material year of assessment for which there is a balance of section 80 payments then, as respects years of assessment subsequent to that year, sub-paragraph (2) above shall apply only to so much of the capital payments mentioned therein as is equal to 3J times the amount of postponed tax released by that balance.

(4) For any material year of assessment, the amount of postponed tax released by a balance of section 80 payments for that year shall be determined by the formula:—

where

• "E" is the postponed tax, within the meaning of paragraph 11 above ;

• "F" is an amount equal to 30 per cent. of any consideration for that year which falls within sub-paragraph (5)(a) of that paragraph ;

• "G" is the balance of the section 80 payments for that year ; and

• "H" is the aggregate of the capital payments (including that balance) taken into account under sub-paragraph (5)(b) of that paragraph for that year.

(5) If, in a case where sub-paragraph (2) above applies in accordance with sub-paragraph (3) above, there were, for the material year of assessment concerned,—

(a) a balance of section 80 payments derived from payments received by the beneficiary, and

(b) another such balance derived from payments received by a close relative of his,

sub-paragraph (2) above shall apply (in accordance with sub-paragraph (3) above) to the capital payments which made up the balance derived from payments received by the beneficiary in priority to Capital payments which made up the other balance.

(6) Subject to sub-paragraph (5) above, where there is more than one capital payment to which sub-paragraph (2) above applies, the proportion of each of them which is left out of account as mentioned in that sub-paragraph shall be the same.

(7) Where, by virtue of the preceding provisions of this paragraph, the whole or any part of a capital payment falls to be left out of account as mentioned in sub-paragraph (2) above, section 45 of the [1981 c. 35.] Finance Act 1981 shall have effect in relation to a benefit which is received by the beneficiary or, as the case may be, a close relative of his and which, in whole or in part, consists of that payment as if, in the material year of assessment concerned, chargeable gains equal to so much of that payment as falls to be so left out of account were, by reason of that payment, treated under section 80 of that Act as accruing to the beneficiary or, as the case may be, the close relative.

13 (1) Where, by virtue of sub-paragraph (2) of paragraph 12 above, the whole or any part of a capital payment falls to be left out of account as mentioned in that sub-paragraph, it shall to the same extent be left out of account for the purposes of the application on any other occasion of any provision of paragraphs 7 to 12 of this Schedule.

(2) Where sub-paragraph (6) of paragraph 11 above applies for any material year of assessment, any capital payments which—

(a) fall to be taken into account under sub-paragraph (5)(b) of that paragraph for that year, and

(b) are not such as to fall within paragraph 12(1) above,

shall be left out of account for the purposes referred to in sub-paragraph (1) above.

(3) Where sub-paragraph (6) of paragraph 11 above does not apply for any material year of assessment, so much of any capital payment falling within paragraphs (a) and (b) of sub-paragraph (2) above as is equal to 3 1/3 times the amount of postponed tax released by that payment shall be left out of account for the purposes referred to in sub-paragraph (1) above.

(4) The amount of postponed tax released by a capital payment shall be determined for the purposes of sub-paragraph (3) above by the formula in paragraph 12(4) above, except that, in applying that formula for those purposes, " G " shall be the amount of the capital payment in question.

(5) In this paragraph, " material year of assessment" shall be construed in accordance with paragraph 11(4) above.

Second and later claims

14 (1) This paragraph applies where—

(a) as a result of a claim (in this paragraph referred to as " the earlier claim "), payment of an amount of capital gains tax (in this paragraph referred to as " the original tax "), determined in accordance with paragraph 6 or paragraph 7 above, is or was postponed by virtue of this Schedule ; and

(b) after the making of the earlier claim, another claim (in this paragraph referred to as " the later claim ") is made in relation to an attributed gain to which the earlier claim did not relate; and

(c) the settlement to which the earlier and the later claims relate is the same.

(2) If the year of assessment which is the relevant year of assessment in relation to any attributed gain to which the later claim relates is earlier than the earliest year of assessment which is the relevant year of assessment in relation to any attributed gain to which the earlier claim related, then,—

(a) the earlier claim and the postponement resulting from it shall be set aside ; and

(b) the provisions of this Schedule shall have effect as if (notwithstanding paragraph 2(2) above) the attributed gains to which the later claim relates included the attributed gains to which the earlier claim related.

(3) Where sub-paragraph (2) above does not apply and, at the time the later claim is made, payment of any of the original tax remains postponed by virtue of this Schedule, then, subject to sub-paragraph (4) below,—

(a) paragraphs 4 to 10 above shall not apply in relation to the later claim ; and

(b) payment of the tax referable to the attributed gain or gains to which the later claim relates shall be postponed by virtue of this Schedule ; and

(c) paragraphs 11 and 12 above shall apply as if the payment of that tax had been postponed as a result of the earlier claim and, accordingly, that tax shall be added to the original tax.

(4) If, in a case where sub-paragraph (3) above applies, the relevant year of assessment in relation to an attributed gain (in this sub-paragraph referred to as "the later gain") to which the later claim relates is the same as the relevant year of assessment in relation to an attributed gain to which the earlier claim related,—

(a) paragraph 3 above shall not apply in relation to the later gain ; and

(b) in relation to the later gain, the references in sub-paragraph (3) above to the tax referable to the gain shall be construed as references to the capital gains tax assessed by reason of the gain.

(5) Where sub-paragraph (2) above does not apply and, at the time the later claim is made, there is no longer any postponement of the payment of any of the original tax, then, in the application of the provisions of this Schedule in relation to the later claim, paragraph 4(2) above shall not apply and " the base year " for the purposes of paragraphs 4 and 5 above shall be that year of assessment which was the base year in relation to the earlier claim.

Information

15 (1) The Board may by notice in writing require any person to furnish them, within such time as they may direct, not being less than twenty-eight days, with such particulars as they think necessary for the purposes of section 70 of this Act and this Schedule.

(2) Subsections (2) to (5) of section 481 of the Taxes Act shall have effect in relation to sub-paragraph (1) above as they have effect in relation to subsection (1) of that section ; but, in the application of those subsections by virtue of this sub-paragraph, references to Chapter III of Part XVII of the Taxes Act shall be construed as references to section 70 of this Act and this Schedule.

(3) In any case where—

(a) a claim has been made, and

(b) as a result of the claim, payment of an amount of capital gains tax was postponed by virtue of this Schedule, and

(c) at a time when any of that tax remains unpaid, there is a disposal to which paragraph 11(2) above applies or the beneficiary or a close relative of his receives such a capital payment as is referred to in paragraph 11(3) above,

then, not later than three months after the end of the year of assessment in which the disposal occurs or the payment is received, the beneficiary shall inform the Board of the disposal or receipt, as the case may be.

(4) The Table in section 98 of the [1970 c. 9.] Taxes Management Act 1970 (penalties for failure to comply with notices, furnish information etc.) shall be amended as follows—

(a) at the end of the first column there shall be inserted—

“Paragraph 15(1) of Schedule 14 to the Finance Act 1984”; and

(b) at the end of the second column there shall be inserted—

“Paragraph 15(3) of Schedule 14 to the Finance Act 1984”.

Consequential relief from C.T.T

16 In any case where—

(a) payment of an amount of capital gains tax is postponed by virtue of this Schedule, and

(b) any of that tax becomes payable in accordance with paragraph 11 above by reason of the receipt of a capital payment by a close relative of the beneficiary, as mentioned in sub-paragraph (3) of that paragraph, and

(c) all or part of the tax becoming so payable is paid by the close relative,

the payment by the close relative shall be treated for the purposes of capital transfer tax as made in satisfaction of a liability of his.