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Commencement Orders bringing legislation that affects this Act into force:

SCHEDULES

Section 16.

SCHEDULE 1E+W+S+N.I. Rates of duty where pollution reduced

Meaning of “the 1994 Act"E+W+S+N.I.

1In this Schedule “the 1994 Act” means the M1Vehicle Excise and Registration Act 1994.E+W+S+N.I.

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Marginal Citations

Certificates as to reduced pollutionE+W+S+N.I.

2The following section shall be inserted after section 61A of the 1994 Act—E+W+S+N.I.

61B Certificates as to reduced pollution.

(1)The Secretary of State may by regulations make provision—

(a)for the making of an application to the Secretary of State for the issue in respect of an eligible vehicle of a reduced pollution certificate;

(b)for the manner in which any determination of whether to issue such a certificate on such an application is to be made;

(c)for the examination of an eligible vehicle, for the purposes of the determination mentioned in paragraph (b), by such persons, and in such manner, as may be prescribed;

(d)for a fee to be paid for such an examination;

(e)for a reduced pollution certificate to be issued in respect of an eligible vehicle if, and only if, it is found, on a prescribed examination, that the reduced pollution requirements are satisfied with respect to it;

(f)for the form and content of such a certificate;

(g)for such a certificate to be valid for such period as the Secretary of State may determine;

(h)for the revocation, cancellation or surrender of such a certificate before the end of any such period;

(i)for the Secretary of State to be entitled to require the return to him of such a certificate that has been revoked;

(j)for the fact that such a certificate is, or is not, in force in respect of a vehicle to be treated as having conclusive effect for the purposes of this Act as to such matters as may be prescribed;

(k)for the Secretary of State to be entitled, in prescribed cases, to require the production of such a certificate before making a determination for the purposes of section 7(5); and

(l)for appeals against any determination not to issue such a certificate.

(2)For the purposes of this Act, the reduced pollution requirements are satisfied with respect to a vehicle at any time if, as a result of adaptations of the prescribed description having been made to the vehicle after the prescribed date, the prescribed requirements are satisfied at that time with respect to the rate and content of the vehicle’s emissions.

(3)Without prejudice to the generality of subsection (1), for the purpose of enabling the Secretary of State to determine whether the reduced pollution requirements are satisfied at any time with respect to a vehicle in respect of which a reduced pollution certificate is in force, regulations under this section—

(a)may authorise such person as may be prescribed to require the vehicle to be re-examined in accordance with the regulations;

(b)may provide for a fee to be paid for such a re-examination;

(c)may provide for the refund of such a fee if it is found, on the prescribed re-examination, that the reduced pollution requirements are satisfied with respect to the vehicle.

(4)In this section “eligible vehicle” means—

(a)a bus, as defined in paragraph 3(2) of Schedule 1;

(b)a vehicle to which paragraph 6 of Schedule 1 applies;

(c)a haulage vehicle, as defined in paragraph 7(2) of Schedule 1, other than a showman’s vehicle; or

(d)a goods vehicle, other than one falling within paragraph 9(2) or 11(2) of Schedule 1.

(5)In this section “prescribed” means prescribed by regulations made by the Secretary of State.

BusesE+W+S+N.I.

3(1)In sub-paragraph (1) of paragraph 3 of Schedule 1 to the 1994 Act (annual rates of vehicle excise duty for buses), after “bus" there shall be inserted “ with respect to which the reduced pollution requirements are not satisfied ”.E+W+S+N.I.

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

(1A)The annual rate of vehicle excise duty applicable to a bus with respect to which the reduced pollution requirements are satisfied is the general rate specified in paragraph 1(2).

(3)In sub-paragraph (6) of that paragraph, for “which falls" there shall be substituted which—

(a)is not a vehicle with respect to which the reduced pollution requirements are satisfied; and

(b)falls.

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Commencement Information

I1Sch. 1 partly in force; Sch. 1 paras. 1, 2, 15-17 in force at Royal Assent see Sch. 1 para. 17(2); Sch. 1 paras. 3-14 in force for specified purposes at 1.1.1999 by S.I. 1998/3092, art. 2

Special vehiclesE+W+S+N.I.

4In paragraph 4(7) of that Schedule (annual rates of vehicle excise duty for special vehicles), for “which falls" there shall be substituted which— E+W+S+N.I.

(a)is not a vehicle with respect to which the reduced pollution requirements are satisfied; and

(b)falls.

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Commencement Information

I2Sch. 1 partly in force; Sch. 1 paras. 1, 2, 15-17 in force at Royal Assent see Sch. 1 para. 17(2); Sch. 1 paras. 3-14 in force for specified purposes at 1.1.1999 by S.I. 1998/3092, art. 2

Recovery vehiclesE+W+S+N.I.

5In paragraph 5(6) of that Schedule (annual rates of vehicle excise duty for recovery vehicles), for “which falls" there shall be substituted which— E+W+S+N.I.

(a)is not a vehicle with respect to which the reduced pollution requirements are satisfied; and

(b)falls.

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Commencement Information

I3Sch. 1 partly in force; Sch. 1 paras. 1, 2, 15-17 in force at Royal Assent see Sch. 1 para. 17(2); Sch. 1 paras. 3-14 in force for specified purposes at 1.1.1999 by S.I. 1998/3092, art. 2

Vehicles used for exceptional loadsE+W+S+N.I.

6(1)In paragraph 6 of that Schedule (annual rates of vehicle excise duty for vehicles used for exceptional loads), in sub-paragraph (2), for “the heavy tractive unit rate" there shall be substituted “ the rate specified in sub-paragraph (2A). ”E+W+S+N.I.

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

(2A)The rate referred to in sub-paragraph (2) is—

(a)in the case of a vehicle with respect to which the reduced pollution requirements are not satisfied, £5,170; and

(b)in the case of a vehicle with respect to which those requirements are satisfied, £4,670.

(3)Sub-paragraph (3A) of that paragraph shall cease to have effect.

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Commencement Information

I4Sch. 1 partly in force; Sch. 1 paras. 1, 2, 15-17 in force at Royal Assent see Sch. 1 para. 17(2); Sch. 1 paras. 3-14 in force for specified purposes at 1.1.1999 by S.I. 1998/3092, art. 2

Haulage vehiclesE+W+S+N.I.

7(1)In paragraph 7 of that Schedule (annual rates of vehicle excise duty for haulage vehicles), in sub-paragraph (1)(b), for “the general haulage vehicle rate" there shall be substituted “ the rate specified in sub-paragraph (3A) ”.E+W+S+N.I.

(2)In sub-paragraph (3) of that paragraph, for “which falls" there shall be substituted which—

(a)is not a vehicle with respect to which the reduced pollution requirements are satisfied; and

(b)falls.

(3)After that sub-paragraph there shall be inserted the following sub-paragraph—

(3A)The rate referred to in sub-paragraph (1)(b) is—

(a)in the case of a vehicle with respect to which the reduced pollution requirements are not satisfied, £350; and

(b)in the case of a vehicle with respect to which those requirements are satisfied, the general rate specified in paragraph 1(2).

(4)Sub-paragraphs (4), (5) and (6) of that paragraph shall cease to have effect.

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Commencement Information

I5Sch. 1 partly in force; Sch. 1 paras. 1, 2, 15-17 in force at Royal Assent see Sch. 1 para. 17(2); Sch. 1 paras. 3-14 in force for specified purposes at 1.1.1999 by S.I. 1998/3092, art. 2

Rigid goods vehiclesE+W+S+N.I.

8(1)In sub-paragraph (1) of paragraph 9 of that Schedule (annual rates of vehicle excise duty for rigid goods vehicles), after “which" there shall be inserted “ is not a vehicle with respect to which the reduced pollution requirements are satisfied and which ”.E+W+S+N.I.

(2)In sub-paragraph (3) of that paragraph, for the words from “which has" to the end of the sub-paragraph there shall be substituted which—

(a)is not a vehicle with respect to which the reduced pollution requirements are satisfied,

(b)has a revenue weight exceeding 44,000 kilograms, and

(c)is not an island goods vehicle,

shall be £5,170.

(3)In sub-paragraph (4) of that paragraph, for “which falls" there shall be substituted which—

(a)is not a vehicle with respect to which the reduced pollution requirements are satisfied; and

(b)falls.

(4)Sub-paragraph (5) of that paragraph shall cease to have effect.

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Commencement Information

I6Sch. 1 partly in force; Sch. 1 paras. 1, 2, 15-17 in force at Royal Assent see Sch. 1 para. 17(2); Sch. 1 paras. 3-14 in force for specified purposes at 1.1.1999 by S.I. 1998/3092, art. 2

9After that paragraph there shall be inserted the following paragraphs—E+W+S+N.I.

9A(1)This paragraph applies to a rigid goods vehicle which—

(a)is a vehicle with respect to which the reduced pollution requirements are satisfied;

(b)is not a vehicle for which the annual rate of vehicle excise duty is determined under paragraph 9(2); and

(c)has a revenue weight exceeding 3,500 kilograms.

(2)Subject to sub-paragraph (3), the annual rate of vehicle excise duty applicable to a rigid goods vehicle to which this paragraph applies shall be determined in accordance with the table set out in paragraph 9B by reference to—

(a)the revenue weight of the vehicle, and

(b)the number of axles on the vehicle.

(3)The annual rate of vehicle excise duty applicable to a rigid goods vehicle to which this paragraph applies which has a revenue weight exceeding 44,000 kilograms shall be £4,670.

9BThat table is as follows—

Revenue weight of vehicleRate
(1)(2)(3)(4)(5)
ExceedingNot ExceedingTwo axle vehicleThree axle vehicleFour or more axle vehicle
kgskgs£££
3,5007,500150150150
7,50012,000150150150
12,00013,000150150150
13,00014,000150150150
14,00015,000340150150
15,00017,000820150150
17,00019,000820350150
19,00021,000820520150
21,00023,000820970150
23,00025,0008201,730330
25,00027,0008201,840970
27,00029,0008201,8401,820
29,00031,0008201,8402,860
31,00044,0008201,8403,900
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Commencement Information

I7Sch. 1 partly in force; Sch. 1 paras. 1, 2, 15-17 in force at Royal Assent see Sch. 1 para. 17(2); Sch. 1 paras. 3-14 in force for specified purposes at 1.1.1999 by S.I. 1998/3092, art. 2

10In paragraph 10 of that Schedule (the trailer supplement), in sub-paragraph (1), for “paragraph 9" there shall be substituted “ paragraphs 9 and 9A ”.E+W+S+N.I.

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Commencement Information

I8Sch. 1 partly in force; Sch. 1 paras. 1, 2, 15-17 in force at Royal Assent see Sch. 1 para. 17(2); Sch. 1 paras. 3-14 in force for specified purposes at 1.1.1999 by S.I. 1998/3092, art. 2

Tractive unitsE+W+S+N.I.

11(1)In sub-paragraph (1) of paragraph 11 of that Schedule (annual rates of vehicle excise duty for tractive units), after “which" there shall be inserted “ is not a vehicle with respect to which the reduced pollution requirements are satisfied and which ”.E+W+S+N.I.

(2)In sub-paragraph (3) of that paragraph, for the words from “which has" to the end of the sub-paragraph there shall be substituted which—

(a)is not a vehicle with respect to which the reduced pollution requirements are satisfied,

(b)has a revenue weight exceeding 44,000 kilograms, and

(c)is not an island goods vehicle,

shall be £5,170.

(3)In sub-paragraph (4) of that paragraph, for “which falls" there shall be substituted which—

(a)is not a vehicle with respect to which the reduced pollution requirements are satisfied; and

(b)falls.

(4)Sub-paragraph (5) of that paragraph shall cease to have effect.

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Commencement Information

I9Sch. 1 partly in force; Sch. 1 paras. 1, 2, 15-17 in force at Royal Assent see Sch. 1 para. 17(2); Sch. 1 paras. 3-14 in force for specified purposes at 1.1.1999 by S.I. 1998/3092, art. 2

12After that paragraph there shall be inserted the following paragraphs—E+W+S+N.I.

11A(1)This paragraph applies to a tractive unit which—

(a)is a vehicle with respect to which the reduced pollution requirements are satisfied;

(b)is not a vehicle for which the annual rate of vehicle excise duty is determined under paragraph 11(2); and

(c)has a revenue weight exceeding 3,500 kilograms.

(2)Subject to sub-paragraph (3), the annual rate of vehicle excise duty applicable to a tractive unit to which this paragraph applies shall be determined, in accordance with the table set out in paragraph 11B, by reference to—

(a)the revenue weight of the tractive unit,

(b)the number of axles on the tractive unit, and

(c)the types of semi-trailers, distinguished according to the number of their axles, which are to be drawn by it.

(3)The annual rate of vehicle excise duty applicable to a tractive unit to which this paragraph applies which has a revenue weight exceeding 44,000 kilograms shall be £4,670.

11BThat table is as follows—

Revenue weight of tractive unitRate for tractive unit with two axlesRate of tractive unit with three or more axles
(1)(2)(3)(4)(5)(6)(7)(8)
ExceedingNot exceedingAny no. of semi-trailer axles2 or more semi-trailer axles3 or more semi-trailer axlesAny no. of semi-trailer axles2 or more semi-trailer axles3 or more semi-trailer axles
kgskgs££££££
3,5007,500150150150150150150
7,50012,000150150150150150150
12,00016,000150150150150150150
16,00020,000150150150150150150
20,00023,000310150150150150150
23,00026,000690150150150150150
26,00028,000690630150630150150
28,00031,0001,2401,2405901,240160150
31,00033,0002,0302,0301,2402,030500150
33,00034,0004,6704,6701,2402,030970150
34,00036,0004,6704,6702,3402,0301,600360
36,00038,0004,6704,6702,7102,3202,320780
38,00044,0004,6704,6702,7102,3202,320780
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Commencement Information

I10Sch. 1 partly in force; Sch. 1 paras. 1, 2, 15-17 in force at Royal Assent see Sch. 1 para. 17(2); Sch. 1 paras. 3-14 in force for specified purposes at 1.1.1999 by S.I. 1998/3092, art. 2

Other amendmentsE+W+S+N.I.

13In section 15 of the 1994 Act (vehicles becoming chargeable to duty at higher rate), after subsection (2) there shall be inserted the following subsection—E+W+S+N.I.

(2A)For the purposes of subsection (1) a vehicle is also used so as to subject it to a higher rate if—

(a)the rate of vehicle excise duty paid on a vehicle licence taken out for the vehicle was the rate applicable to a vehicle of the same description with respect to which the reduced pollution requirements are satisfied, and

(b)while the licence is in force, the vehicle is used at a time when those requirements are not satisfied with respect to it.

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Commencement Information

I11Sch. 1 partly in force; Sch. 1 paras. 1, 2, 15-17 in force at Royal Assent see Sch. 1 para. 17(2); Sch. 1 paras. 3-14 in force for specified purposes at 1.1.1999 by S.I. 1998/3092, art. 2

14In section 16 of the 1994 Act (exceptions from charge at higher rate in case of tractive units), at the beginning of subsection (1) there shall be inserted “Subject to subsection (9)" and after subsection (7) there shall be inserted the following subsections—E+W+S+N.I.

(8)This subsection applies to a tractive unit (“the relevant tractive unit”) in relation to which subsection (2), (4) or (6) applies if—

(a)the rate of duty paid on taking out the licence for the relevant tractive unit is the rate applicable to a tractive unit of the appropriate description with respect to which the reduced pollution requirements are satisfied; and

(b)while the licence is in force, the relevant tractive unit is used at a time when the reduced pollution requirements are not satisfied with respect to it.

(9)Where subsection (8) applies, subsection (1) does not prevent duty becoming payable under section 15 at the rate applicable to a tractive unit of the appropriate description with respect to which the reduced pollution requirements are not satisfied.

(10)In this section “the appropriate description” means the description mentioned in paragraph (b) of whichever of subsections (2), (4) and (6) applies in relation to the relevant tractive unit.

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Commencement Information

I12Sch. 1 partly in force; Sch. 1 paras. 1, 2, 15-17 in force at Royal Assent see Sch. 1 para. 17(2); Sch. 1 paras. 3-14 in force for specified purposes at 1.1.1999 by S.I. 1998/3092, art. 2

15In section 45 of the 1994 Act (offences relating to false or misleading declarations and information), in subsections (3A) and (3B), after “section 61A" there shall be inserted “ or 61B ”.E+W+S+N.I.

16(1)Paragraph 22 of Schedule 2 to that Act (exemption in relation to vehicle testing) shall be amended as follows.E+W+S+N.I.

(2)In sub-paragraph (1)—

(a)in paragraph (a), for “or a vehicle weight test" there shall be substituted “ , a vehicle weight test or a reduced pollution test ”; and

(b)in paragraph (b), for “a compulsory test or a vehicle weight test" there shall be substituted “ any such test ”.

(3)In sub-paragraph (2), after “vehicle weight test" there shall be inserted “ , a reduced pollution test ”.

(4)In sub-paragraph (2A), after “compulsory test", in each place it occurs, there shall be inserted “ or a reduced pollution test ”.

(5)In sub-paragraph (3), after “compulsory test" there shall be inserted “ , or a reduced pollution test, ”.

(6)After sub-paragraph (6A) there shall be inserted the following sub-paragraph—

(6AA)In this paragraph “a reduced pollution test” means any examination of a vehicle for which provision is made by regulations under section 61B of this Act.

(7)In sub-paragraph (6B), for “or vehicle weight test" there shall be substituted “ , a vehicle weight test or a reduced pollution test ”.

(8)In sub-paragraphs (8) and (9), the word “or” shall be inserted at the end of paragraphs (a) and (c) and after paragraph (c) there shall be inserted the following paragraph—

(d)a certificate issued by virtue of section 61B of this Act.

CommencementE+W+S+N.I.

17(1)Subject to sub-paragraph (2) below, the preceding provisions of this Schedule shall come into force in relation to licences issued on or after such day as the Secretary of State may by order made by statutory instrument appoint; and different days may be appointed under this sub-paragraph for different purposes.E+W+S+N.I.

(2)Paragraphs 1, 2, 15 and 16 above come into force with the passing of this Act.

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Subordinate Legislation Made

P1Sch. 1 para. 17(1) power partly exercised (9.12.1998): 1.1.1999 appointed for specified purposes by S.I. 1998/3092, art. 2

Section 20.

SCHEDULE 2E+W+S+N.I. Assessments for excise duty purposes

Alcoholic Liquor Duties Act 1979 (c.4)E+W+S+N.I.

1In section 8 of the Alcoholic Liquor Duties Act 1979 (remission of duty in respect of spirits used for medical or scientific purposes) the following subsections shall be inserted after subsection (2)—E+W+S+N.I.

(3)Subsection (4) below applies if—

(a)spirits are received and delivered in accordance with subsection (1) above,

(b)they are not used as proposed, and

(c)it is not shown to the satisfaction of the Commissioners that they can be accounted for by natural waste or other legitimate cause.

(4)In such a case the Commissioners—

(a)may assess as being excise duty due from the person concerned an amount equal to the duty that would have been chargeable on the spirits if, at the time of delivery from warehouse, they had been delivered for home use and otherwise than in accordance with subsection (1) above, and

(b)may notify him or his representative accordingly.

2In section 10 of the Alcoholic Liquor Duties Act 1979 (remission of duty on spirits for use in art or manufacture) the following subsections shall be inserted after subsection (2)—E+W+S+N.I.

(3)Subsection (4) below applies if—

(a)spirits are received and delivered in accordance with subsection (1) above,

(b)they are not used as proposed, and

(c)it is not shown to the satisfaction of the Commissioners that they can be accounted for by natural waste or other legitimate cause.

(4)In such a case the Commissioners—

(a)may assess as being excise duty due from the person concerned an amount equal to the duty that would have been chargeable on the spirits if, at the time of delivery from warehouse, they had been delivered for home use and otherwise than in accordance with subsection (1) above, and

(b)may notify him or his representative accordingly.

3(1)Section 11 of the Alcoholic Liquor Duties Act 1979 (relief from duty on imported goods not for human consumption containing spirits) shall be amended as follows.E+W+S+N.I.

(2)At the beginning there shall be inserted “ (1) ”.

(3)At the end there shall be inserted—

(2)Subsection (3) below applies if—

(a)the Commissioners make a direction under subsection (1) above, but

(b)it turns out that the goods were for human consumption.

(3)In such a case the Commissioners—

(a)may assess as being excise duty due from the relevant person an amount equal to the duty that would have been chargeable on the goods if the direction had not been made, and

(b)may notify him or his representative accordingly.

(4)The reference in subsection (3) above to the relevant person is to the importer or (if different) the person who sought the direction.

Hydrocarbon Oil Duties Act 1979 (c.5)E+W+S+N.I.

4(1)Section 13AB of the Hydrocarbon Oil Duties Act 1979 (misuse of kerosene) shall be amended as follows.E+W+S+N.I.

(2)For subsection (1)(a) there shall be substituted—

(a)in respect of the quantity of kerosene used the Commissioners may assess as being excise duty due from him an amount equal to duty on the same quantity of gas oil at the rate for rebated gas oil which is in force at the time of the contravention, and they may notify him or his representative accordingly;.

(3)For subsection (2)(a) there shall be substituted—

(a)in respect of the quantity of kerosene taken into the fuel supply the Commissioners may assess as being excise duty due from him an amount equal to duty on the same quantity of gas oil at the rate for rebated gas oil which is in force at the time of the contravention, and they may notify him or his representative accordingly;.

Tobacco Products Duty Act 1979 (c.7)E+W+S+N.I.

5In section 8 of the Tobacco Products Duty Act 1979 (charge in cases of default) in subsection (2)—E+W+S+N.I.

(a)for “require him to pay duty" there shall be substituted “ assess an amount as duty due from him ”;

(b)at the end there shall be inserted , and they may notify him or his representative accordingly.

Prospective

Finance (No. 2) Act 1992 (c.48)E+W+S+N.I.

6(1)Section 2 of the Finance (No. 2) Act 1992 (power to provide for drawback of excise duty) shall be amended as follows.E+W+S+N.I.

(2)In subsection (3) (cancellation of drawback) paragraph (b) and the word “and" immediately preceding it shall be omitted.

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

(3A)If entitlement to drawback is cancelled under any provision contained in regulations by virtue of subsection (3) above the Commissioners—

(a)may assess as being excise duty due from the prescribed person an amount equal to sums paid or credited to any person in respect of the drawback, and

(b)may notify the prescribed person or his representative accordingly.

(3B)The reference in subsection (3A) above to the prescribed person is to such person as may be prescribed for the purposes of the subsection by regulations under this section.

Finance Act 1994 (c.9)E+W+S+N.I.

7In section 12 of the Finance Act 1994 (assessment to excise duty) after subsection (1) there shall be inserted—E+W+S+N.I.

(1A)Subject to subsection (4) below, where it appears to the Commissioners—

(a)that any person is a person from whom any amount has become due in respect of any duty of excise; and

(b)that the amount due can be ascertained by the Commissioners,

the Commissioners may assess the amount of duty due from that person and notify that amount to that person or his representative.

8(1)In section 12A of the Finance Act 1994 (other assessments relating to excise duty matters) subsection (3) (amount assessed deemed to be duty due) shall be amended as follows.E+W+S+N.I.

(2)At the end of paragraph (b) the word “or" shall be omitted and after that paragraph there shall be inserted—

(bb)section 8, 10 or 11 of the Alcoholic Liquor Duties Act 1979,.

(3)In paragraph (c) after “13," there shall be inserted “ 13AB, ” and after that paragraph there shall be inserted—

(d)section 8 of the Tobacco Products Duty Act 1979, or

(e)section 2 of the Finance (No. 2) Act 1992,.

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Commencement Information

I13Sch. 2 para. 8 partly in force; Sch. 2 para. 8 not in force at Royal Assent see Sch. 2 para. 12; Sch. 2 para. 8(1)(2) in force and Sch. 2 para. 8(3) in force for specified purposes at 1.10.1998 by S.I. 1998/2243, art. 2(2)(b)

9(1)In section 12B of the Finance Act 1994, subsection (2) (meaning of relevant time) shall be amended as follows.E+W+S+N.I.

(2)After paragraph (e) there shall be inserted—

(ea)in the case of an assessment under section 8 or 10 of the Alcoholic Liquor Duties Act 1979, the time of delivery from warehouse;

(eb)in the case of an assessment under section 11 of that Act, the time when the direction was made;.

(3)In paragraph (f) after “13," there shall be inserted “ 13AB, ”.

(4)After paragraph (g) there shall be inserted—

(ga)in the case of an assessment under section 8 of the Tobacco Products Duty Act 1979, the time when the Commissioners are satisfied of a failure to prove as mentioned in subsection (2)(a) or (b) of that section;

(gb)in the case of an assessment under section 2 of the Finance (No. 2) Act 1992, the time when the sums were paid or credited in respect of the drawback;.

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Commencement Information

I14Sch. 2 para. 9 partly in force; Sch. 2 para. 9 not in force at Royal Assent see Sch. 2 para. 12; Sch. 2 para. 9(1)-(3) in force and Sch. 2 para. 9(4) in force for specified purposes at 1.10.1998 by S.I. 1998/2243, art. 2(2)(b)

10In section 14 of the Finance Act 1994 (requirement for review of a decision) in subsection (1)(ba)—E+W+S+N.I.

(a)for “or" (occurring after “Management Act") there shall be substituted “ , section 8, 10 or 11 of the Alcoholic Liquor Duties Act 1979, ”;

(b)after “13," there shall be inserted “ 13AB, ”;

(c)after “Hydrocarbon Oil Duties Act 1979," there shall be inserted “ section 8 of the Tobacco Products Duty Act 1979, section 2 of the Finance (No. 2) Act 1992, ”.

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Commencement Information

I15Sch. 2 para. 10 partly in force; Sch. 2 para. 10 not in force at Royal Assent see Sch. 2 para. 12; Sch. 2 para. 10(a)(b) in force and Sch. 2 para. 10(c) in force for specified purposes at 1.10.1998 by S.I. 1998/2243, art. 2(2)(b)

11In section 16 of the Finance Act 1994 (appeals to a tribunal) there shall be inserted after subsection (3)—E+W+S+N.I.

(3A)Subsection (3) above shall not apply if the appeal arises out of an assessment under section 8, 10 or 11 of the Alcoholic Liquor Duties Act 1979.

CommencementE+W+S+N.I.

12This Schedule shall come into force on such day as the Commissioners of Customs and Excise may by order made by statutory instrument appoint; and different days may be appointed under this paragraph for different purposes.E+W+S+N.I.

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Subordinate Legislation Made

P2Sch. 2 para. 12 power partly exercised (14.9.1998): 1.10.1998 appointed for specified provisions by S.I. 1998/2243, art. 2

Section 31.

SCHEDULE 3E+W+S+N.I. Advance corporation tax

Section 1 of the Provisional Collection of Taxes Act 1968E+W+S+N.I.

1(1)Section 1 of the M2Provisional Collection of Taxes Act 1968 (temporary statutory effect of House of Commons resolutions) shall be amended as follows.E+W+S+N.I.

(2)In subsection (1) the words “(including advance corporation tax)" shall cease to have effect.

(3)This paragraph has effect in relation to distributions made on or after 6th April 1999.

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Marginal Citations

Section 10 of the Taxes Management Act 1970E+W+S+N.I.

2(1)Section 10 of the M3Taxes Management Act 1970 (notice of liability to corporation tax) shall be amended as follows.E+W+S+N.I.

(2)Subsection (4) (which makes provision in relation to surplus ACT) shall cease to have effect.

(3)This paragraph has effect in relation to accounting periods beginning on or after 6th April 1999.

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Marginal Citations

Section 87 of the Taxes Management Act 1970E+W+S+N.I.

3(1)Section 87 of the M4Taxes Management Act 1970 (interest on overdue ACT and income tax on company payments) shall be amended as follows.E+W+S+N.I.

(2)In subsection (1) (which contains a reference to Schedule 13) the words “13 or" shall cease to have effect.

(3)In subsection (2), paragraph (a) (which concerns ACT) shall cease to have effect.

(4)In subsection (6) (which contains a reference to Schedule 13) the words “13 or" shall cease to have effect.

(5)In subsection (7)—

(a)the words “advance corporation tax and" shall cease to have effect; and

(b)for “either of those Schedules" there shall be substituted “ the said Schedule 16 ”.

(6)This paragraph has effect in relation to accounting periods beginning on or after 6th April 1999.

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Marginal Citations

Section 87A of the Taxes Management Act 1970E+W+S+N.I.

4(1)Section 87A of the M5Taxes Management Act 1970 (interest on overdue corporation tax etc) shall be amended as follows.E+W+S+N.I.

(2)Subsection (4) (which makes provision in relation to surplus ACT) shall cease to have effect.

(3)Subsections (4B) and (7) (which make further provision in relation to surplus ACT) shall cease to have effect.

(4)Sub-paragraph (2) above has effect where the later period mentioned in subsection (4) of section 87A begins on or after 6th April 1999.

(5)Sub-paragraph (3) above has effect where the earlier period mentioned in subsections (4B) and (7) of section 87A begins on or after 6th April 1999.

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Marginal Citations

Section 94 of the Taxes Management Act 1970E+W+S+N.I.

F15. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S+N.I.

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Amendments (Textual)

F1Sch. 3 para. 5 repealed (with effect as mentioned in s. 117, Sch. 27 Pt. III(28), Note) by 1998 c. 36, s. 165, Sch. 27 Pt. III(28)

Section 109 of the Taxes Management Act 1970E+W+S+N.I.

6(1)Section 109 of the M6Taxes Management Act 1970 (corporation tax on close company in connection with loans to participators etc) shall be amended as follows.E+W+S+N.I.

(2)In subsection (3A) (interest under section 87A on so much of tax under section 419 of Taxes Act 1988 as is referable to amount of loan or advance repaid shall not be payable in respect of any period after repayment made)—

(a)after “If" there shall be inserted “ (a) ”;

(b)after “principal Act," there shall be inserted or

(b)there is such a release or writing off of the whole or any part of the debt in respect of a loan or advance as is referred to in that subsection,;

(c)after “amount repaid" there shall be inserted “ , released or written off ”; and

(d)after “the repayment was made" there shall be inserted “ or the release or writing off occurred ”.

(3)This paragraph has effect in relation to the release or writing off of the whole or part of a debt on or after 6th April 1999.

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Marginal Citations

Section 13 of the Taxes Act 1988E+W+S+N.I.

7(1)Section 13 of the Taxes Act 1988 (small companies’ relief) shall be amended as follows.E+W+S+N.I.

(2)In subsection (7) (exclusion of group income etc) for the words from “other than franked investment income" onwards there shall be substituted— other than franked investment income (if any) which the company (“the receiving company") receives from a company resident in the United Kingdom which is—

(a)a 51 per cent. subsidiary of the receiving company or of a company resident in the United Kingdom of which the receiving company is a 51 per cent. subsidiary; or

(b)a trading or holding company which does not fall within section 247(1A) and which is owned by a consortium the members of which include the receiving company.

(3)After subsection (8) there shall be inserted—

(8AA)Subsections (8) to (9A) of section 247 shall apply for the purposes of subsection (7) above as they apply for the purposes of that section.

(8AB)The reference in subsection (7) above to franked investment income received by a company applies to any such income received by another person on behalf of or in trust for the company, but not to any such income received by the company on behalf of or in trust for another person.

(4)This paragraph has effect in relation to distributions made on or after 6th April 1999.

Section 14 of the Taxes Act 1988E+W+S+N.I.

8(1)Section 14 of the Taxes Act 1988 (ACT and qualifying distributions) shall be amended as follows.E+W+S+N.I.

(2)Subsections (1) and (3) to (5) (which make provision for and in connection with the imposition of ACT) shall cease to have effect.

(3)This paragraph has effect in relation to distributions made on or after 6th April 1999.

Section 75 of the Taxes Act 1988E+W+S+N.I.

9(1)Section 75 of the Taxes Act 1988 (expenses of management: investment companies) shall be amended as follows.E+W+S+N.I.

(2)In subsection (2) the words “group income" shall cease to have effect.

(3)This paragraph has effect in relation to distributions made on or after 6th April 1999.

Section 116 of the Taxes Act 1988E+W+S+N.I.

10(1)Section 116 of the Taxes Act 1988 (arrangements for transferring relief) shall be amended as follows.E+W+S+N.I.

(2)In subsection (2), paragraph (d) (which makes provision in relation to section 239) shall cease to have effect.

(3)This paragraph has effect in relation to accounting periods beginning on or after 6th April 1999.

Section 238 of the Taxes Act 1988E+W+S+N.I.

11(1)Section 238 of the Taxes Act 1988 (interpretation of terms and collection of ACT) shall cease to have effect.E+W+S+N.I.

(2)This paragraph has effect in relation to accounting periods beginning on or after 6th April 1999.

Section 239 of the Taxes Act 1988E+W+S+N.I.

12(1)Section 239 of the Taxes Act 1988 (set-off of ACT against liability to corporation tax) shall cease to have effect.E+W+S+N.I.

(2)Sub-paragraph (1) above has effect in relation to accounting periods beginning on or after 6th April 1999.

(3)No advance corporation tax shall, by virtue of section 239(4) of the Taxes Act 1988, be treated as if it were paid in respect of distributions made in accounting periods beginning on or after 6th April 1999.

(4)The limit under section 239(2) of the Taxes Act 1988 on the set-off of advance corporation tax for an accounting period of a company beginning before, and ending on or after, 6th April 1999 (a “straddling period”) shall be determined as if—

(a)the straddling period were an accounting period beginning at the beginning of the straddling period and ending on 5th April 1999 (“the notional period"); and

(b)there were apportioned to the notional period a proportionate amount of the profits of the company which, apart from this sub-paragraph, would be taken into account in determining the limit under section 239(2) of that Act.

(5)The references in sub-paragraphs (2) and (3) above to accounting periods beginning on or after 6th April 1999 include a reference to a separate accounting period mentioned in section 245(2) of the Taxes Act 1988 which begins on 6th April 1999.

(6)The reference in sub-paragraph (4) above to an accounting period beginning before, and ending on or after, 6th April 1999 includes a reference to a separate accounting period mentioned in section 245(2) of the Taxes Act 1988 which begins before, and ends on or after, that date.

Section 240 of the Taxes Act 1988E+W+S+N.I.

13(1)Section 240 of the Taxes Act 1988 (set-off of company’s surplus ACT against subsidiary’s liability to corporation tax) shall cease to have effect.E+W+S+N.I.

(2)This paragraph has effect in relation to accounting periods of the surrendering company (as defined in section 240(1) of the Taxes Act 1988) beginning on or after 6th April 1999.

Section 241 of the Taxes Act 1988E+W+S+N.I.

14(1)Section 241 of the Taxes Act 1988 (calculation of ACT where company receives franked investment income) shall cease to have effect.E+W+S+N.I.

(2)This paragraph has effect in relation to accounting periods beginning on or after 6th April 1999.

Section 245 of the Taxes Act 1988E+W+S+N.I.

15(1)Section 245 of the Taxes Act 1988 (calculation etc of ACT on change of ownership of company) shall cease to have effect.E+W+S+N.I.

(2)This paragraph has effect in relation to changes in ownership (within the meaning of section 245 of that Act) occurring on or after 6th April 1999.

Section 245A of the Taxes Act 1988E+W+S+N.I.

16(1)Section 245A of the Taxes Act 1988 (restriction on application of section 240 in certain circumstances) shall cease to have effect.E+W+S+N.I.

(2)This paragraph has effect in relation to changes in ownership (within the meaning of section 245A of that Act) occurring on or after 6th April 1999.

Section 245B of the Taxes Act 1988E+W+S+N.I.

17(1)Section 245B of the Taxes Act 1988 (restriction on set-off where asset transferred after change in ownership of company) shall cease to have effect.E+W+S+N.I.

(2)Sub-paragraph (1) above has effect in relation to disposals on or after 6th April 1999.

(3)In relation to an accounting period beginning before, and ending on or after, 6th April 1999, the reference in section 245B(4)(a) of the Taxes Act 1988 to the end of the relevant period shall be taken to be a reference to the end of a period which ends on 5th April 1999.

Section 246 of the Taxes Act 1988E+W+S+N.I.

18(1)Section 246 of the Taxes Act 1988 (charge of ACT at previous rate until new rate fixed, and changes of rate) shall cease to have effect.E+W+S+N.I.

(2)This paragraph has effect in relation to distributions made on or after 6th April 1999.

Section 247 of the Taxes Act 1988E+W+S+N.I.

19(1)Section 247 of the Taxes Act 1988 (dividends etc paid by one member of a group to another) shall be amended as follows.E+W+S+N.I.

(2)Subsections (1), (2) and (3) (which enable dividends paid by one member of a group to another to be excluded from sections 14(1) and 231 of the Taxes Act 1988 etc) shall cease to have effect.

F2(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4)In subsection (5)—

F2(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b)the words “and shall not apply to a dividend" onwards shall cease to have effect.

(5)In subsection (6)—

(a)paragraph (a),

(b)the words “advance corporation tax ought to have been paid or",

(c)the words “as the case may be",

(d)the words “paying or",

(e)the words “receiving or", and

(f)the words “the advance corporation tax had been duly paid or",

shall cease to have effect.

(6)In subsection (7) the words “paying or" and “receiving or" shall cease to have effect.

(7)In subsection (10)—

(a)the words “dividends or", and

(b)the words “and references to “group income” shall be construed accordingly",

shall cease to have effect.

(8)This paragraph has effect in relation to distributions made on or after 6th April 1999.

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Amendments (Textual)

F2Sch. 3 para. 19(3)(4)(a) repealed (11.5.2001 with effect as mentioned in Sch. Pt. 2(10) Note of the amending Act) by 2001 c. 9, s.110, Sch. 33 Pt. 2(10)

Section 248 of the Taxes Act 1988E+W+S+N.I.

20(1)Section 248 of the Taxes Act 1988 (provisions supplemental to section 247) shall be amended as follows.E+W+S+N.I.

(2)In subsections (2) and (3) the words “dividends or other" shall cease to have effect.

(3)This paragraph has effect in relation to distributions made on or after 6th April 1999.

Section 252 of the Taxes Act 1988E+W+S+N.I.

21(1)Section 252 of the Taxes Act 1988 (rectification of excessive set-off of ACT or tax credit) shall be amended as follows.E+W+S+N.I.

(2)In subsection (1), paragraph (a) (which concerns the set-off of ACT) shall cease to have effect.

(3)This paragraph has effect in relation to accounting periods beginning on or after 6th April 1999.

Section 253 of the Taxes Act 1988E+W+S+N.I.

22(1)Section 253 of the Taxes Act 1988 (power to modify or replace section 234(5) to (9) and Schedule 13) shall be amended as follows.E+W+S+N.I.

(2)In subsection (1)—

(a)paragraph (b), and

(b)the words “and to Schedule 13",

shall cease to have effect.

(3)Subsection (2) (which concerns ACT) shall cease to have effect.

(4)In subsection (3)(a) (which contains a reference to ACT) the words “advance corporation tax or" shall cease to have effect.

(5)This paragraph has effect in relation to accounting periods beginning on or after 6th April 1999.

Section 255 of the Taxes Act 1988E+W+S+N.I.

23(1)Section 255 of the Taxes Act 1988 (“gross rate" and “gross amount" of distributions to include ACT) shall cease to have effect.E+W+S+N.I.

(2)This paragraph has effect in relation to distributions made on or after 6th April 1999.

Section 419 of the Taxes Act 1988E+W+S+N.I.

24(1)Section 419 of the Taxes Act 1988 (loans to participators etc) shall be amended as follows.E+W+S+N.I.

(2)In subsection (1) (charge at rate of ACT) for the words from “such proportion" onwards there shall be substituted “ 25 per cent. of the amount of the loan or advance ”.

(3)In subsection (4) (relief in case of repayment of loan or advance)—

(a)after “subsection (1) above and" there shall be inserted “ (a) ”;

(b)after “is repaid to the company," there shall be inserted or

(b)the whole or part of the debt in respect of the loan or advance is released or written off,; and

(c)after “the repayment is made" there shall be inserted “ or the release or writing off occurs ”.

(4)In subsection (4A) (provision in relation to relief under subsection (4))—

(a)after “Where" there shall be inserted “ (a) ”;

(b)after “that loan or advance," there shall be inserted or

(b)the release or writing off of the whole or any part of the debt in respect of a loan or advance occurs on or after the day on which tax by virtue of this section becomes due in relation to that loan or advance,; and

(c)after “repayment", in the second and third places where it occurs, there shall be inserted “ , release or writing off ”.

(5)Sub-paragraph (2) above has effect in relation to loans or advances made on or after 6th April 1999.

(6)Sub-paragraphs (3) and (4) above have effect in relation to the release or writing off of the whole or part of a debt on or after 6th April 1999.

Section 434 of the Taxes Act 1988E+W+S+N.I.

25(1)Section 434 of the Taxes Act 1988 (franked investment income etc) shall be amended as follows.E+W+S+N.I.

(2)Subsection (3) (certain franked investment income not to be used to frank distributions) shall cease to have effect.

(3)Subsection (6) (which makes provision in relation to section 239) shall cease to have effect.

(4)Subsection (8) (which applies where subsection (3) or (6) of section 434 applies) shall cease to have effect.

(5)Sub-paragraph (2) above has effect in relation to franked investment income which is attributable to distributions made on or after 6th April 1999.

(6)Sub-paragraphs (3) and (4) above have effect in relation to accounting periods beginning on or after 6th April 1999.

Section 434C of the Taxes Act 1988E+W+S+N.I.

26(1)Section 434C of the Taxes Act 1988 (interest on repayment of ACT) shall cease to have effect.E+W+S+N.I.

(2)This paragraph has effect in relation to distributions made on or after 6th April 1999.

Section 468Q of the Taxes Act 1988E+W+S+N.I.

27(1)Section 468Q of the Taxes Act 1988 (dividend distribution to corporate unit holder) shall be amended as follows.E+W+S+N.I.

(2)In subsection (3) (as amended by paragraph 8(6)(b) of Schedule 6 to the M7Finance (No. 2) Act 1997)—

(a)for the definition of “C" there shall be substituted—

C = such amount of the gross income as does not derive from franked investment income, as reduced by an amount equal to the trustees’ net liability to corporation tax in respect of the gross income;; and

(b)for the definition of “D" there shall be substituted—

D = the amount of the gross income, as reduced by an amount equal to the trustees’ net liability to corporation tax in respect of the gross income;.

(3)After that subsection there shall be inserted—

(3A)Any reference in this section to the trustees’ net liability to corporation tax in respect of the gross income is a reference to the amount of the liability of the trustees of the authorised unit trust to corporation tax in respect of that gross income less the amount (if any) of any reduction of that liability which is given or falls to be given in accordance with any arrangements having effect by virtue of section 788 or by way of a credit under section 790(1).

(4)After subsection (5) there shall be inserted—

(5A)Where, in relation to a dividend distribution, any tax is deemed to have been deducted by virtue of the application of subsection (2)(b) above, the amount to which the unit holder is entitled by way of repayment of that tax shall not exceed the amount of the unit holder’s portion of the trustees’ net liability to corporation tax in respect of the gross income.

(5B)For the purposes of subsection (5A) above the unit holder’s portion shall be determined by reference to the proportions in which unit holders have rights in the authorised unit trust in the distribution period in question.

(5C)The trustees of the authorised unit trust shall in the appropriate statement sent to the unit holder under section 234A include a statement showing their net liability to corporation tax in respect of the gross income.

(5)This paragraph has effect in relation to distribution periods beginning on or after 6th April 1999.

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Marginal Citations

Section 490 of the Taxes Act 1988E+W+S+N.I.

28(1)Section 490 of the Taxes Act 1988 (companies carrying on a mutual business or not carrying on a business) shall be amended as follows.E+W+S+N.I.

(2)In subsection (1) the words “(including group income)" shall cease to have effect.

(3)This paragraph has effect in relation to distributions made on or after 6th April 1999.

Section 497 of the Taxes Act 1988E+W+S+N.I.

29(1)Section 497 of the Taxes Act 1988 (restriction on setting ACT against income from oil extraction activities etc) shall cease to have effect.E+W+S+N.I.

(2)This paragraph has effect in relation to accounting periods beginning on or after 6th April 1999.

Section 498 of the Taxes Act 1988E+W+S+N.I.

30(1)Section 498 of the Taxes Act 1988 (limited right to carry back surrendered ACT) shall cease to have effect.E+W+S+N.I.

(2)Sub-paragraph (1) above has effect in relation to accounting periods of the surrendering company (as defined in section 240(1) of the Taxes Act 1988) beginning on or after 6th April 1999.

(3)The limit under section 498(5) of the Taxes Act 1988 for an accounting period of the surrendering company (as defined in section 240(1) of that Act) beginning before, and ending on or after, 6th April 1999 (a “straddling period”) shall be determined as if—

(a)the straddling period were an accounting period beginning at the beginning of the straddling period and ending on 5th April 1999 (“the notional period"); and

(b)there were apportioned to the notional period a proportionate amount of the limit which, apart from this sub-paragraph, would apply for the purposes of section 498(5) of the Taxes Act 1988.

Section 499 of the Taxes Act 1988E+W+S+N.I.

31(1)Section 499 of the Taxes Act 1988 (surrender of ACT where oil extraction company etc owned by a consortium) shall cease to have effect.E+W+S+N.I.

(2)This paragraph has effect in relation to distributions made on or after 6th April 1999.

Section 703 of the Taxes Act 1988E+W+S+N.I.

32(1)Section 703 of the Taxes Act 1988 (cancellation of tax advantage) shall be amended as follows.E+W+S+N.I.

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

(3A)The amount of income tax which may be specified in an assessment which is made under subsection (3) above to counteract a tax advantage—

(a)obtained by a person in circumstances falling within paragraph D or paragraph E of section 704, and

(b)consisting of the avoidance of a charge to income tax,

shall not exceed the amount of income tax for which that person would be liable in respect of the receipt, on the date on which the consideration mentioned in paragraph D or paragraph E of section 704 is received, of a qualifying distribution of an amount equal to the amount or value of that consideration.

(3)Subsections (4) to (6) (which make provision in relation to treating of amounts of ACT as paid) shall cease to have effect.

(4)Sub-paragraph (2) above has effect in relation to assessments under section 703(3) of the Taxes Act 1988 made on or after 6th April 1999.

(5)Sub-paragraph (3) above has effect for the year 1999-00 and subsequent years of assessment.

Section 704 of the Taxes Act 1988E+W+S+N.I.

33(1)Section 704 of the Taxes Act 1988 (the prescribed circumstances) shall be amended as follows.E+W+S+N.I.

(2)In paragraph A, sub-paragraph (d) (which relates to ACT) shall cease to have effect.

(3)This paragraph has effect in relation to distributions made on or after 6th April 1999.

Section 705 of the Taxes Act 1988E+W+S+N.I.

34(1)Section 705 of the Taxes Act 1988 (appeals against Board’s notices under section 703) shall be amended as follows.E+W+S+N.I.

(2)Subsections (6) to (8) (which make provision supplemental to section 703(5) and (6)) shall cease to have effect.

(3)This paragraph has effect for the year 1999-00 and subsequent years of assessment.

Section 797 of the Taxes Act 1988E+W+S+N.I.

35(1)Section 797 of the Taxes Act 1988 (limits on credit: corporation tax) shall be amended as follows.E+W+S+N.I.

(2)Sub-paragraphs (4) and (5) (which make provision in relation to section 239) shall cease to have effect.

(3)This paragraph has effect in relation to accounting periods beginning on or after 6th April 1999.

Section 802 of the Taxes Act 1988E+W+S+N.I.

36(1)Section 802 of the Taxes Act 1988 (UK insurance companies trading overseas) shall be amended as follows.E+W+S+N.I.

(2)In subsection (2)(a) the words “and group income" shall cease to have effect.

(3)This paragraph has effect in relation to distributions made on or after 6th April 1999.

Section 813 of the Taxes Act 1988E+W+S+N.I.

37(1)Section 813 of the Taxes Act 1988 (recovery of tax credits incorrectly paid) shall be amended as follows.E+W+S+N.I.

(2)In subsection (6), paragraph (b) (which makes provision in relation to ACT) shall cease to have effect.

(3)This paragraph has effect in relation to accounting periods beginning on or after 6th April 1999.

Section 826 of the Taxes Act 1988E+W+S+N.I.

38(1)Section 826 of the Taxes Act 1988 (interest on tax overpaid) shall be amended as follows.E+W+S+N.I.

(2)Subsection (2A) (material date for ACT) shall cease to have effect.

(3)Subsection (7) (which makes provision in relation to surplus ACT) shall cease to have effect.

(4)Subsections (7AA) and (7CA) (which make further provision in relation to surplus ACT) shall cease to have effect.

(5)Sub-paragraph (2) above has effect in relation to accounting periods beginning on or after 6th April 1999.

(6)Sub-paragraph (3) above has effect where the later period mentioned in subsection (7) of section 826 begins on or after 6th April 1999.

(7)Sub-paragraph (4) above has effect where the earlier period mentioned in subsections (7AA) and (7CA) of section 826 begins on or after 6th April 1999.

Section 832 of the Taxes Act 1988E+W+S+N.I.

39(1)Section 832 of the Taxes Act 1988 (interpretation of the Tax Acts) shall be amended as follows.E+W+S+N.I.

(2)In subsection (1) for the definition of “franked investment income" there shall be substituted—

franked investment income” means income of a company resident in the United Kingdom which consists of a distribution in respect of which the company is entitled to a tax credit (and which accordingly represents income equal to the aggregate of the amount or value of the distribution and the amount of that credit);.

(3)In subsection (1) the definition of “franked payment" shall cease to have effect.

(4)In subsection (1) the definition of “group income" shall cease to have effect.

(5)In subsection (1) the definition of “the rate of advance corporation tax" shall cease to have effect.

(6)In subsection (1) the definition of “surplus of franked investment income" shall cease to have effect.

(7)After subsection (4) there shall be inserted—

(4A)Any reference in the Tax Acts to franked investment income received by a company apply to any such income received by another person on behalf of or in trust for the company, but not to any such income received by the company on behalf of or in trust for another person.

(8)Sub-paragraphs (2), (3), (6) and (7) above have effect in relation to accounting periods beginning on or after 6th April 1999.

(9)Sub-paragraphs (4) and (5) above have effect in relation to distributions made on or after 6th April 1999.

Section 835 of the Taxes Act 1988E+W+S+N.I.

40(1)Section 835 of the Taxes Act 1988 (“total income" in the Income Tax Acts) shall be amended as follows.E+W+S+N.I.

(2)In subsection (6), in paragraph (a) (which refers to an amount equal to a tax credit calculated by reference to the rate of ACT in force for any year) for the words from “amount" to “for any year" there shall be substituted “ amount which is equal to a tax credit calculated by reference to the tax credit fraction ”.

(3)This paragraph has effect in relation to distributions made on or after 6th April 1999.

Schedule 13 to the Taxes Act 1988E+W+S+N.I.

41(1)Schedule 13 to the Taxes Act 1988 (collection of ACT) shall cease to have effect.E+W+S+N.I.

(2)This paragraph has effect—

(a)in relation to return periods beginning on or after 6th April 1999; and

(b)in relation to accounting periods beginning on or after that date.

Schedule 13A to the Taxes Act 1988E+W+S+N.I.

42(1)Schedule 13A to the Taxes Act 1988 (surrenders of ACT) shall cease to have effect.E+W+S+N.I.

(2)This paragraph has effect in relation to accounting periods of the surrendering company (as defined in section 240(1) of the Taxes Act 1988) beginning on or after 6th April 1999.

Schedule 24 to the Taxes Act 1988E+W+S+N.I.

43(1)Schedule 24 to the Taxes Act 1988 (assumptions in relation to controlled foreign companies etc) shall be amended as follows.E+W+S+N.I.

(2)In paragraph 6—

(a)in sub-paragraph (1), paragraph (a) (which makes provision in relation to section 247(1)) shall cease to have effect; and

(b)in sub-paragraph (2), the words “dividends or" shall cease to have effect.

(3)Paragraph 7 (which makes provision in relation to section 240) shall cease to have effect.

(4)This paragraph has effect in relation to accounting periods of companies resident outside the United Kingdom which begin on or after 6th April 1999.

Schedule 26 to the Taxes Act 1988E+W+S+N.I.

44(1)Schedule 26 to the Taxes Act 1988 (controlled foreign companies: relief against liability for tax in respect of chargeable profits) shall be amended as follows.E+W+S+N.I.

(2)Paragraph 2 (which makes provision in relation to ACT) shall cease to have effect.

(3)Sub-paragraphs (1) and (2) above have effect in relation to accounting periods beginning on or after 6th April 1999.

(4)The relevant maximum (as defined in paragraph 2(3) of Schedule 26 to the Taxes Act 1988) for an accounting period beginning before, and ending on or after, 6th April 1999 (a “straddling period”) shall be determined as if—

(a)the straddling period were an accounting period beginning at the beginning of the straddling period and ending on 5th April 1999 (“the notional period"); and

(b)there were apportioned to the notional period a proportionate amount of the amounts mentioned in paragraph 2(3)(a) and (b) of Schedule 26 to the Taxes Act 1988.

Paragraph 8 of Schedule 4 to the Finance (No. 2) Act 1997E+W+S+N.I.

45Paragraph 8 of Schedule 4 to the M8Finance (No. 2) Act 1997 (which prospectively amends section 238(1) of the Taxes Act 1988) shall not have effect.E+W+S+N.I.

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Marginal Citations

Paragraph 9 of Schedule 4 to the Finance (No. 2) Act 1997E+W+S+N.I.

46Paragraph 9 of Schedule 4 to the M9Finance (No. 2) Act 1997 (which prospectively amends section 241 of the Taxes Act 1988) shall not have effect.E+W+S+N.I.

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Marginal Citations

Paragraph 18 of Schedule 4 to the Finance (No. 2) Act 1997E+W+S+N.I.

47Paragraph 18 of Schedule 4 to the M10Finance (No. 2) Act 1997 (which prospectively amends section 703 of the Taxes Act 1988) shall not have effect.E+W+S+N.I.

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Marginal Citations

Paragraph 23 of Schedule 4 to the Finance (No. 2) Act 1997E+W+S+N.I.

48Paragraph 23 of Schedule 4 to the M11Finance (No. 2) Act 1997 (which prospectively amends Schedule 13 to the Taxes Act 1988) shall not have effect.E+W+S+N.I.

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Marginal Citations

Section 35.

SCHEDULE 4E+W+S+N.I. Interest payable under the Tax Acts by or to companies

Interest on overpaid or early paid corporation taxE+W+S+N.I.

1(1)In section 826(2) of the Taxes Act 1988 (which defines “the material date” for the purposes of interest on overpaid corporation tax) at the beginning there shall be inserted “ Subject to section 826A(2), ”.E+W+S+N.I.

(2)After section 826 of the Taxes Act 1988 there shall be inserted—

826A Interest on payments in respect of corporation tax and meaning of “the material date".

(1)The Treasury may by regulations make provision applying section 826, with such modifications as may be prescribed, for the purpose of conferring on companies of such descriptions as may be prescribed a right to interest—

(a)on such payments made by them in respect of corporation tax as may be prescribed,

(b)at the rate applicable under section 178 of the M12Finance Act 1989, and

(c)for such period as may be prescribed,

and for treating any such interest for the purposes, or prescribed purposes, of the Tax Acts as interest under section 826(1)(a) on a repayment of corporation tax.

(2)The Treasury may by regulations make provision modifying section 826(2) in relation to companies of such description as may be prescribed.

(3)Subsections (1) and (2) above do not apply in relation to companies in relation to which section 826(2) is modified or otherwise affected by regulations under section 59E of the Management Act (alteration of date on which corporation tax becomes due and payable) in relation to the accounting period to which the corporation tax in question relates.

(4)Where the Treasury make regulations under subsection (2) above in relation to companies of any description, they may also make regulations modifying section 59DA(2) of the Management Act in relation to those companies, or any description of such companies, by varying the date before which the claim there mentioned may not be made.

(5)Regulations under this section—

(a)may make different provision in relation to different cases or circumstances or in relation to companies or accounting periods of different descriptions;

(b)may make such supplementary, incidental, consequential or transitional provision as appears to the Treasury to be necessary or expedient.

(6)Regulations under this section may not make provision in relation to accounting periods ending before the day appointed under section 199 of the M13Finance Act 1994 for the purposes of Chapter III of Part IV of that Act (corporation tax self-assessment).

(7)In this section “prescribed” means prescribed by regulations made under this section.

(3)In section 178 of the M14Finance Act 1989 (setting of rates of interest) in subsection (2)(m) (which lists the provisions of the Taxes Act 1988 to which the section applies) for “and 826" there shall be substituted “ 826 and 826A(1)(b) ”.

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Marginal Citations

The “material date" for interest on a repayment of income taxE+W+S+N.I.

2(1)In section 826 of the Taxes Act 1988 (interest on tax overpaid) in subsection (3) (date from which interest runs on a repayment of income tax, or a payment of tax credit, to a company) for the words from “the material date is" to “for the accounting period" there shall be substituted “ the material date is the day after the end of the accounting period ”.E+W+S+N.I.

(2)This paragraph has effect in relation to accounting periods ending on or after the day appointed under section 199 of the M15Finance Act 1994 for the purposes of Chapter III of Part IV of that Act (corporation tax self-assessment).

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Marginal Citations

Recovery of interest overpaid under section 826(1)(a)E+W+S+N.I.

3(1)In section 826 of the Taxes Act 1988 (interest on tax overpaid) after subsection (8) there shall be inserted—E+W+S+N.I.

(8A)Where—

(a)interest has been paid to a company under subsection (1)(a) above,

(b)there is a change in the company’s assessed liability to corporation tax, other than a change which in whole or in part corrects an error made by the Board or an officer of the Board, and

(c)as a result only of that change (and, in particular, not as a result of any error in the calculation of the interest), it appears to an officer of the Board that the interest ought not to have been paid, either at all or to any extent,

the interest that ought not to have been paid may be recovered from the company as if it were interest charged under Part IX of the Management Act (interest on overdue tax).

(8B)For the purposes of subsection (8A) above, the cases where there is a change in a company’s assessed liability to corporation tax are those cases where—

(a)an assessment, or an amendment of an assessment, of the amount of corporation tax payable by the company for the accounting period in question is made, or

(b)a determination of that amount is made under paragraph 36 or 37 of Schedule 18 to the Finance Act 1998 (which until superseded by a self-assessment under that Schedule has effect as if it were one),

whether or not any previous assessment or determination has been made.

(8C)In subsection (8A)(b) above “error” includes—

(a)any computational error; and

(b)the allowance of a claim or election which ought not to have been allowed.

F3(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3)The amendments made by this paragraph have effect in relation to interest on repayments of corporation tax paid for accounting periods ending on or after the day appointed under section 199 of the M16Finance Act 1994 for the purposes of Chapter III of Part IV of that Act (corporation tax self-assessment).

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Amendments (Textual)

F3Sch. 4 para. 3(2) repealed (11.5.2001 with effect as mentioned in Sch. 33 Pt. 2 (14)(2) Note 2 of the amending act) by 2001 c. 9, s. 110, Sch. 33 Pt. 2(14)

Marginal Citations

Interest on underpaid tax where reliefs are carried backE+W+S+N.I.

4(1)Section 87A of the M17Taxes Management Act 1970 (interest on overdue corporation tax etc) shall be amended as follows.E+W+S+N.I.

(2)In each of subsections (4), (4A) and (6) (which refer to corporation tax becoming due and payable as mentioned in subsection (1) of that section) for the words “as mentioned in subsection (1) above" there shall be substituted “ as mentioned in subsection (8) below ”.

(3)After subsection (7) there shall be inserted—

(8)In subsections (4), (4A) and (6) above, any reference to the date on which corporation tax for an accounting period became, or would have become, due and payable shall be construed on the basis that corporation tax for an accounting period becomes due and payable on the day following the expiry of nine months from the end of the accounting period.

(4)After subsection (8) there shall be inserted—

(9)The power conferred by section 59E of this Act (alteration of date on which corporation tax becomes due and payable) does not include power to make provision in relation to subsection (4), (4A), (6) or (8) above the effect of which would be to change the meaning of references in subsection (4), (4A) or (6) above to the date on which corporation tax for an accounting period became, or would have become, due and payable (as mentioned in subsection (8) above).

(5)The amendments made by this paragraph have effect where the accounting period whose due and payable date falls to be determined is an accounting period ending on or after the day appointed under section 199 of the M18Finance Act 1994 for the purposes of Chapter III of Part IV of that Act (corporation tax self-assessment).

(6)In sub-paragraph (5) above “due and payable date”, in relation to an accounting period, means the date on which corporation tax for that period becomes, or (as the case may be) would become, due and payable.

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Marginal Citations

Interest on overpaid tax where reliefs are carried backE+W+S+N.I.

5(1)Section 826 of the Taxes Act 1988 (interest on tax overpaid) shall be amended as follows.E+W+S+N.I.

(2)In each of subsections (7), (7A), (7B) and (7C) (which refer to corporation tax becoming due and payable as mentioned in subsection (2) of that section) for the words “as mentioned in subsection (2) above" there shall be substituted “ as mentioned in subsection (7D) below ”.

(3)After subsection (7CA) there shall be inserted—

(7D)In subsections (7), (7A), (7B) and (7C) above, any reference to the date on which corporation tax for an accounting period became, or would have become, due and payable shall be construed on the basis that corporation tax for an accounting period becomes due and payable on the day following the expiry of nine months from the end of the accounting period.

(4)After subsection (7D) there shall be inserted—

(7E)The power conferred by section 59E of the Management Act (alteration of date on which corporation tax becomes due and payable) does not include power to make provision in relation to subsection (7), (7A), (7B), (7C) or (7D) above the effect of which would be to change the meaning of references in subsection (7), (7A), (7B) or (7C) above to the date on which corporation tax for an accounting period became, or would have become, due and payable (as mentioned in subsection (7D) above).

(5)The amendments made by this paragraph have effect where the accounting period whose due and payable date falls to be determined is an accounting period ending on or after the day appointed under section 199 of the M19Finance Act 1994 for the purposes of Chapter III of Part IV of that Act (corporation tax self-assessment).

(6)In sub-paragraph (5) above “due and payable date”, in relation to an accounting period, means the date on which corporation tax for that period becomes, or (as the case may be) would become, due and payable.

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Marginal Citations

Company liquidationsE+W+S+N.I.

6(1)Section 342 of the Taxes Act 1988 (tax on company in liquidation) shall be amended as follows.E+W+S+N.I.

(2)In subsection (2) (corporation tax charge on profits of final year etc) after “Subject to subsection (3)" there shall be inserted “ or (3A) ”.

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

(3A)If, in the case of the company’s final accounting period, the income (if any) which consists of interest received or receivable by the company under section 826 does not exceed £2,000, that income shall not be subject to corporation tax.

In this subsection “the company’s final accounting period” means the accounting period of the company which, in accordance with section 12(7), ends by reason of the completion of the winding up.

(4)This paragraph has effect in relation to final accounting periods ending on or after the day appointed under section 199 of the M20Finance Act 1994 for the purposes of Chapter III of Part IV of that Act (corporation tax self-assessment).

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Marginal Citations

Loan relationshipsE+W+S+N.I.

F47. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S+N.I.

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Amendments (Textual)

F4Sch. 4 para. 7 repealed (24.7.2002 with effect as mentioned in Sch. 40 Pt. 3(10) Note 2 of the amending Act) by 2002 c. 23, s. 141, Sch. 40 Pt. 3(10) Note 2

Section 38(1).

SCHEDULE 5E+W+S+N.I. Rent and other receipts from land

Part IE+W+S+N.I. Main charging provisions

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Commencement Information

I16Sch. 5 Pts. I-III in force and has effect as mentioned in s. 38.

1In section 15(1) of the Taxes Act 1988 (the Schedule A charge), for Schedule A substitute—E+W+S+N.I.

Schedule AE+W+S+N.I.

1(1)Tax is charged under this Schedule on the annual profits arising from a business carried on for the exploitation, as a source of rents or other receipts, of any estate, interest or rights in or over land in the United Kingdom.

(2)To the extent that any transaction is entered into for the exploitation, as a source of rents or other receipts, of any estate, interest or rights in or over land in the United Kingdom, it is taken to be entered into in the course of such a business.

(3)All businesses and transactions carried on or entered into by a particular person or partnership, so far as they are businesses or transactions the profits of which are chargeable to tax under this Schedule, are treated for the purposes of this Schedule as, or as entered into in the course of carrying on, a single business.

There are qualifications to this rule in the case of—

(a)companies not resident in the United Kingdom (see subsection (1A) below); and

(b)insurance companies (see sections 432AA and 441B(2A)).

(4)The receipts referred to in the expression “as a source of rents or other receipts” include—

(a)payments in respect of a licence to occupy or otherwise to use land or the exercise of any other right over land, and

(b)rentcharges, ground annuals and feu duties and other annual payments reserved in respect of, or charged on or issuing out of, the land.

2(1)This Schedule does not apply to profits arising from the occupation of land.

(2)This Schedule does not apply to—

(a)profits charged to tax under Case I of Schedule D under—

  • section 53(1) (farming and market gardening), or

  • section 55 (mines, quarries and other concerns);

(b)receipts or expenses taken into account as trading receipts or expenses under section 98 (tied premises);

(c)rent charged to tax under Schedule D under—

  • section 119 (rent, etc. payable in connection with mines, quarries and other concerns), or

  • section 120(1) (certain rent, etc. payable in respect of electric line wayleaves).

(3)The profits of a Schedule A business carried on by a company shall be computed without regard to items giving rise to—

  • credits or debits within Chapter II of Part IV of the M21Finance Act 1996 (loan relationships), or

  • exchange gains or losses within Chapter II of Part II of the M22Finance Act 1993 (foreign exchange gains and losses), or

  • qualifying payments within Chapter II of Part IV of the M23Finance Act 1994 (interest rate and currency contracts).

This Schedule does not affect the operation of those provisions.

3(1)For the purposes of this Schedule a right to use a caravan or houseboat, where the use to which the caravan or houseboat may be put in pursuance of the right is confined to use at a single location in the United Kingdom, is treated as a right deriving from an estate or interest in land in the United Kingdom.

(2)In sub-paragraph (1)—

  • caravan” has the meaning given by section 29(1) of the M24Caravan Sites and Control of Development Act 1960; and

  • houseboat” means a boat or similar structure designed or adapted for use as a place of human habitation.

4(1)In the case of a furnished letting, any sum payable for the use of furniture shall be taken into account in computing the profits chargeable to tax under this Schedule in the same way as rent.

Expenses in connection with the provision of furniture shall similarly be taken into account in the same way as expenses in connection with the premises.

(2)A furnished letting means where—

(a)a sum is payable in respect of the use of premises, and

(b)the tenant or other person entitled to the use of the premises is also entitled, in connection with that use, to the use of furniture.

(3)This paragraph does not apply if the receipts and expenses are taken into account in computing the profits of a trade consisting in, or involving, making furniture available for use in premises.

(4)In this paragraph—

(a)any reference to a sum includes the value of consideration other than money, and references to a sum being payable shall be construed accordingly; and

(b)premises” includes a caravan or houseboat within the meaning of paragraph 3..

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Marginal Citations

2In section 15 of the Taxes Act 1988 (the Schedule A charge), after subsection (1) insert—E+W+S+N.I.

(1A)In the case of a company which is not resident in the United Kingdom—

(a)businesses carried on and transactions entered into by it the profits of which are within the charge to corporation tax under Schedule A, and

(b)businesses carried on and transactions entered into by it the profits of which are within the charge to income tax under Schedule A,

are treated as separate Schedule A businesses..

3For the heading to Part II of the Taxes Act 1988 substitute “ PROVISIONS RELATING TO THE SCHEDULE A CHARGE ”.E+W+S+N.I.

4For section 21 of the Taxes Act 1988 (persons chargeable and computation of amounts chargeable) substitute—E+W+S+N.I.

21 Persons chargeable and basis of assessment.

(1)Income tax under Schedule A shall be charged on and paid by the persons receiving or entitled to the income in respect of which the tax is directed by the Income Tax Acts to be charged.

(2)Income tax under Schedule A is charged on the full amount of the profits arising in the year of assessment.

(3)This section does not apply for the purposes of corporation tax.

21A Computation of amount chargeable.

(1)Except as otherwise expressly provided, the profits of a Schedule A business are computed in the same way as the profits of a trade are computed for the purposes of Case I of Schedule D.

(2)The following provisions apply in accordance with subsection (1)—

  • section 72 (apportionment);

  • the provisions of Chapter V of Part IV (computational provisions relating to the Schedule D charge), except as mentioned in subsection (4) below;

  • section 577 (business entertainment expenses);

  • section 577A (expenditure involving crime);

  • sections 579 and 580 (redundancy payments);

  • sections 588 and 589 (training courses for employees);

  • sections 589A and 589B (counselling services for employees);

  • section 73(2) of the M25Finance Act 1988 (consideration for restrictive undertakings);

  • section 43 of the M26Finance Act 1989 (deductions in respect of certain emoluments);

  • section 76 of that Act (expenses in connection with non-approved retirement benefit schemes);

  • sections 112 and 113 of that Act (expenditure in connection with provision of security asset or service);

  • sections 42 and 46(1) and (2) of the Finance Act 1998 (provisions as to computation of profits and losses).

(3)Section 74(1)(d) of this Act (disallowance of provisions for future repairs) applies in relation to a Schedule A business as if the reference to premises occupied for the purposes of the trade were to premises held for the purposes of the Schedule A business.

(4)The following provisions in Chapter V of Part IV of this Act do not apply, or are excepted from applying, in accordance with subsection (1)—

  • section 82 (interest paid to non-residents),

  • section 87 (treatment of premiums taxed as rent),

  • section 96 (farming and market gardening: relief for fluctuating profits), and

  • section 98 (tied premises: receipts and expenses treated as those of trade).

21B Application of other rules applicable to Case I of Schedule D.

The following provisions apply for the purposes of Schedule A in relation to a Schedule A business as they apply for the purposes of Case I of Schedule D in relation to a trade—

  • sections 103 to 106, 108, 109A and 110 (post-cessation receipts and expenses, etc.);

  • section 113 (effect for income tax purposes of change in the persons engaged in carrying on trade);

  • section 337(1) (effect of company beginning or ceasing to carry on trade);

  • section 401(1) (pre-trading expenditure);

  • section 44 of and Schedule 6 to the Finance Act 1998 (change of accounting basis)..

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Marginal Citations

5After section 21B of the Taxes Act 1988 (inserted by paragraph 4 above) insert—E+W+S+N.I.

21C The Schedule A charge and mutual business.

(1)The following provisions have effect for the purpose of applying the charge to tax under Schedule A in relation to mutual business.

(2)The transactions or relationships involved in mutual business are treated as if they were transactions or relationships between persons between whom no relationship of mutuality existed.

(3)Any surplus arising from the business is regarded as a profit (and any deficit as a loss) if it would be so regarded if the business were not mutual.

(4)The person—

(a)to whom the profit arises for corporation tax purposes, or

(b)who is regarded as receiving or entitled to the profit for income tax purposes,

is the person who would satisfy that description if the business were not mutual business.

(5)Nothing in this section affects the operation of section 488 (co-operative housing associations)..

F56. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S+N.I.

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Amendments (Textual)

F5Sch. 5 para. 6 repealed (31.7.1998 with effect as mentioned in s. 39, Sch. 27 Pt. III(5)) by 1998 c. 36, s. 165, Sch. 27 Pt. III(5)

F67. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S+N.I.

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Amendments (Textual)

F6Sch. 5 para. 7 repealed (31.7.1998 with effect as mentioned in s. 39, Sch. 27 Pt. III(5), Note) by 1998 c. 36, s. 165, Sch. 27 Pt. III(5)

8In section 27 of the Taxes Act 1988 (maintenance funds for historic buildings), for subsection (3) substitute—E+W+S+N.I.

(3)Where by virtue of this section an election has effect in relation to an estate part of which is comprised in a settlement—

(a)there may be treated as deductible from the receipts arising from that part—

(i)any disbursements or expenses of the trustees of the settlement which relate to the other part of the estate and which would be so deductible if that part were also comprised in the settlement, and

(ii)any disbursements or expenses of the owner of the other part of the estate to the extent to which they cannot be deducted by him in the chargeable period in which they are incurred because of an insufficiency of any receipts for that period from which they are deductible apart from this sub-paragraph;

(b)any relief available to the trustees by virtue of section 379A(2)(b) shall instead be available to the owner of the other part of the estate.

This subsection has effect subject to subsection (2A) of section 26..

9Section 28 of the Taxes Act 1988 (deductions from receipts other than rent) shall cease to have effect.E+W+S+N.I.

10Section 29 of the Taxes Act 1988 (sporting rights) shall cease to have effect.E+W+S+N.I.

11In section 30(1) of the Taxes Act 1988 (expenditure on sea walls)—E+W+S+N.I.

(a)for “for the purposes of sections 25, 28 and 31" substitute “ for the purpose of computing the profits of any Schedule A business carried on in relation to those premises ”; and

(b)for “in respect of dilapidation attributable to the year" substitute “ as an expense of the business for that year ”.

12Section 31 of the Taxes Act 1988 (provisions supplementary to sections 25 to 30) shall cease to have effect.E+W+S+N.I.

13Section 33 of the Taxes Act 1988 (agricultural land: allowance for excess expenditure on management) shall cease to have effect.E+W+S+N.I.

14Sections 33A and 33B of the Taxes Act 1988 (connected persons) shall cease to have effect.E+W+S+N.I.

15(1)Section 34 of the Taxes Act 1988 (treatment of premiums, etc. as rent or Schedule D profits) is amended as follows.E+W+S+N.I.

(2)For the sidenote substitute“Treatment of premiums, etc. as rent.".

(3)In subsection (3) for the words from “from the rent" onwards substitute “ as an expense of any Schedule A business carried on by the landlord ”.

(4)In subsection (6) for the words from “no charge" onwards substitute “ no amount shall fall under that subsection to be treated as a receipt of any Schedule A business carried on by the landlord; but that other person shall be taken to have received as income an amount equal to the amount which would otherwise fall to be treated as rent and to be chargeable to tax as if he had received it in consequence of having, on his own account, entered into a transaction falling to be treated as mentioned in paragraph 1(2) of Schedule A. ”.

(5)After subsection (7) insert—

(7A)An amount treated under this section as rent shall be taken into account in computing the profits of the Schedule A business in question for the chargeable period in which it is treated as received..

(6)In subsection (8) for the words from “may, if that person satisfies the Board" to “at his option" substitute “ may, at his option, be paid ”.

16(1)Section 35 of the Taxes Act 1988 (charge on assignment of lease granted at an undervalue) is amended as follows.E+W+S+N.I.

(2)In the sidenote for “Schedule D charge" substitute “ Charge ”.

(3)In subsection (2) for the words from “treated as profits or gains" onwards substitute “ deemed to have been received as income by the assignor and to have been received by him in consequence of his having entered into a transaction falling to be treated as mentioned in paragraph 1(2) of Schedule A. ”.

(4)After that subsection insert—

(2A)An amount deemed under this section to have been received as income by the assignor—

(a)is treated as received when the consideration mentioned in subsection (2) becomes payable, and

(b)shall be taken into account in computing the profits of the Schedule A business in question for the chargeable period in which it is treated as received..

17(1)Section 36 of the Taxes Act 1988 (charge on sale of land with right to reconveyance) is amended as follows.E+W+S+N.I.

(2)In the sidenote for “Schedule D charge" substitute “ Charge ”.

(3)In subsection (1)—

(a)for “the vendor shall be chargeable to tax under Case VI of Schedule D on" substitute “ the following amount shall be deemed to have been received as income by the vendor and to have been received by him in consequence of his having entered into a transaction falling to be treated as mentioned in paragraph 1(2) of Schedule A, that is to say ”; and

(b)for “on that excess" substitute “ the amount of the excess ”.

(4)After subsection (4) insert—

(4A)An amount deemed under this section to have been received as income by the vendor—

(a)is treated as received when the estate or interest is sold, and

(b)shall be taken into account in computing the profits of the Schedule A business in question for the chargeable period in which it is treated as received.

(4B)For the purposes of subsection (4A)(a) an estate or interest in land is treated as sold when any of the following occurs—

(a)an unconditional contract for its sale is entered into,

(b)a conditional contract for its sale becomes unconditional, or

(c)an option or right of pre-emption is exercised requiring the vendor to enter into an unconditional contract for its sale..

18(1)Section 37 of the Taxes Act 1988 (deductions from premiums and rents received) is amended as follows.E+W+S+N.I.

(2)In subsection (1) for paragraphs (a) and (b) substitute—

(a)any amount falls to be treated as a receipt of a Schedule A business by virtue of section 34 or 35, or

(b)any amount would fall to be so treated but for the operation of subsection (2) or (3) below,.

(3)In subsection (2)—

(a)in paragraph (b), for the words from “be" to “any amount" substitute “ be treated by virtue of section 34 or 35 as receiving any amount as income in the course of carrying on a Schedule A business ”; and

(b)in the closing words, for “on which he is so chargeable" substitute “ which he shall be treated as having so received ”.

(4)In subsection (3)—

(a)for “chargeable under section 34 or 35" substitute “ treated by virtue of section 34 or 35 as having received any amount as income in the course of carrying on a Schedule A business and falls to be so treated ”; and

(b)for “on which he is so chargeable" substitute “ which he shall be treated as having so received ”.

(5)In subsection (4) for the words from “purposes" to “other premises" substitute “ purpose, in computing the profits of a Schedule A business, of making deductions in respect of the disbursements and expenses of that business ”.

19For the heading before section 40 of the Taxes Act 1988 substitute Supplementary provisions.E+W+S+N.I.

20(1)Section 40 of the Taxes Act 1988 (tax treatment of receipts and outgoings on sale of land) is amended as follows.E+W+S+N.I.

(2)In subsection (1) for “become receivable or payable on his behalf" substitute “ been received or paid by him ”.

(3)In subsection (3)(b), for the words from “had become receivable" to the end substitute “ had been received or paid directly by him immediately before the time to which the apportionment is made ”.

(4)After subsection (4) insert—

(4A)An amount deemed under this section to have been received or paid shall be taken into account in computing the profits of the Schedule A business in question for the period in which it is treated as received or paid..

(5)Omit subsection (5).

21Section 41 of the Taxes Act 1988 (relief for rent not paid, etc.) shall cease to have effect.E+W+S+N.I.

22In section 42A of the Taxes Act 1988 (non-residents and their representatives), omit subsection (8).E+W+S+N.I.

23In section 65 of the Taxes Act 1988 (Case IV and V assessments: general)—E+W+S+N.I.

(a)omit subsections (2A) and (2B), and

(b)in subsection (4), after “Subsections (1) to (3) above" insert “ and section 65A below ”.

24For section 65A of the Taxes Act 1988 (Case V income from land overseas, etc.) substitute—E+W+S+N.I.

65A Case V income from land outside UK: income tax.

(1)This section applies where a person is chargeable to income tax under Case V of Schedule D in respect of income which—

(a)arises from a business carried on for the exploitation, as a source of rents or other receipts, of any estate, interest or rights in or over land outside the United Kingdom, and

(b)is not income to which section 65(3) applies (income immediately derived from carrying on a trade, profession or vocation).

(2)The provisions of Schedule A apply to determine whether income falls within subsection (1)(a) above as they would apply to determine whether the income fell within paragraph 1(1) of that Schedule if—

(a)the land in question were in the United Kingdom, or

(b)a caravan or houseboat which is to be used at a location outside the United Kingdom were to be used at a location in the United Kingdom.

(3)Any provision of the Taxes Acts which deems there to be a Schedule A business in the case of land in the United Kingdom applies where the corresponding circumstances arise with respect to land outside the United Kingdom so as to deem there to be a business within subsection (1)(a) above.

(4)All businesses and transactions carried on or entered into by a particular person or partnership, so far as they are businesses or transactions the income from which is chargeable to tax under Case V of Schedule D in accordance with this section, are treated for the purposes of the charge to tax under Case V as, or as entered into in the course of carrying on, a single business (an “overseas property business").

(5)The income from an overseas property business shall be computed for the purposes of Case V of Schedule D in accordance with the rules applicable to the computation of the profits of a Schedule A business.

Those rules apply separately in relation to—

(a)an overseas property business, and

(b)any actual Schedule A business of the person chargeable,

as if each were the only Schedule A business carried on by that person.

(6)Sections 80 and 81 (expenses in connection with foreign trades and travel between trades etc.) do not apply in relation to the computation of the profits of an overseas property business.

(7)Sections 503 and 504 of this Act and section 29 of the 1990 Act (provisions relating to furnished holiday accommodation) do not apply to the profits or losses of an overseas property business.

(8)Where under this section rules expressed by reference to domestic concepts of law apply in relation to land outside the United Kingdom, they shall be interpreted so as to produce the result that most closely corresponds with the result produced for Schedule A purposes in relation to land in the United Kingdom..

25After section 70 of the Taxes Act 1988 (corporation tax: basis of assessment, etc.) insert—E+W+S+N.I.

70A Case V income from land outside UK: corporation tax.

(1)This section applies where a company is chargeable to corporation tax under Case V of Schedule D in respect of income which—

(a)arises from a business carried on for the exploitation, as a source of rents or other receipts, of any estate, interest or rights in or over land outside the United Kingdom, and

(b)is not income to which section 70(2) applies (income from a trade or vocation).

(2)The provisions of Schedule A apply to determine whether income falls within subsection (1)(a) above as they would apply to determine whether the income fell within paragraph 1(1) of that Schedule if—

(a)the land in question were in the United Kingdom, or

(b)a caravan or houseboat which is to be used at a location outside the United Kingdom were to be used at a location in the United Kingdom.

(3)Any provision of the Taxes Acts which deems there to be a Schedule A business in the case of land in the United Kingdom applies where the corresponding circumstances arise with respect to land outside the United Kingdom so as to deem there to be a business within subsection (1)(a) above.

(4)All businesses and transactions carried on or entered into by a particular company or partnership, so far as they are businesses or transactions the income from which is chargeable to tax under Case V of Schedule D in accordance with this section, are treated for the purposes of the charge to tax under Case V as, or as entered into in the course of carrying on, a single business (an “overseas property business").

(5)The income from an overseas property business shall be computed for the purposes of Case V of Schedule D in accordance with the rules applicable to the computation of the profits of a Schedule A business.

Those rules apply separately in relation to—

(a)an overseas property business, and

(b)any actual Schedule A business of the company chargeable,

as if each were the only Schedule A business carried on by that company.

(6)Sections 503 and 504 of this Act and section 29 of the 1990 Act (provisions relating to furnished holiday accommodation) do not apply to the profits or losses of an overseas property business.

(7)Where under this section rules expressed by reference to domestic concepts of law apply in relation to land outside the United Kingdom, they shall be interpreted so as to produce the result that most closely corresponds with the result produced for Schedule A purposes in relation to land in the United Kingdom..

Part IIE+W+S+N.I. Treatment of losses

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Commencement Information

I17Sch. 5 Pts. I-III in force and has effectas mentioned in s. 38.

26In Chapter I of Part X of the Taxes Act 1988 (loss relief: income tax), for the heading before section 379A (Schedule A losses) substitute Losses from Schedule A business or overseas property business.E+W+S+N.I.

27After that section insert—E+W+S+N.I.

379B Losses from overseas property business.

The provisions of section 379A apply in relation to an overseas property business as they apply in relation to a Schedule A business..

28In Chapter II of Part X of the Taxes Act 1988 (loss relief: corporation tax), before section 393 insert—E+W+S+N.I.

Losses from Schedule A business or overseas property businessE+W+S+N.I.

392A Schedule A losses.

(1)Where a company incurs a Schedule A loss in an accounting period, the loss shall be set off for the purposes of corporation tax against the company’s total profits for that period.

(2)To the extent that a company’s Schedule A loss cannot be set off under subsection (1), it shall, if the company continues to carry on the Schedule A business in the succeeding accounting period, be carried forward to that period and be treated for the purposes of this section as a Schedule A loss of that period.

(3)Where an investment company ceases to carry on a Schedule A business but continues to be an investment company, any Schedule A loss that cannot be used under the preceding provisions shall be carried forward to the succeeding accounting period and be treated for the purposes of section 75 as if it had been disbursed as expenses of management for that period.

(4)In this section—

(a)a “Schedule A loss” means a loss incurred by a company in a Schedule A business carried on by it; and

(b)investment company” has the same meaning as in Part IV.

(5)The preceding provisions of this section apply to a Schedule A business only to the extent that it is carried on—

(a)on a commercial basis, or

(b)in the exercise of statutory functions.

(6)For the purposes of subsection (5)(a)—

(a)a business or part is not carried on on a commercial basis unless it is carried on with a view to making a profit, but if it is carried on so as to afford a reasonable expectation of profit it is treated as carried on with a view to making a profit; and

(b)if there is a change in the manner in which a business or part is carried on, it is treated as having been carried on throughout an accounting period in the way in which it was being carried on by the end of the period.

(7)In subsection (5)(b) “statutory functions” means functions conferred by or under any enactment (including an enactment contained in a local or private Act).

392B Losses from overseas property business.

(1)Where in any accounting period a company incurs a loss in an overseas property business (whether carried on by it solely or in partnership)—

(a)the loss shall be carried forward to the succeeding accounting period and set against any profits of the business for that period,

(b)if there are no profits of the business for that period, or if the profits for that period are exceeded by the amount of the loss, the loss or the remainder of it shall be carried forward again and set against any profits of the business for the next succeeding accounting period,

and so on.

(2)Subsections (5) to (7) of section 392A apply in relation to relief under subsection (1) above and an overseas property business as they apply in relation to relief under section 392A(1) to (3) and a Schedule A business..

29For section 403 of the Taxes Act 1988 (losses, etc. which may be surrendered by way of group relief) substitute—E+W+S+N.I.

403 Amounts which may be surrendered by way of group relief.

(1)If in an accounting period (the “surrender period") the surrendering company has—

(a)trading losses, excess capital allowances or a non-trading deficit on its loan relationships, or

(b)charges on income, Schedule A losses, or management expenses which are available for group relief,

the amount may, subject to the provisions of this Chapter, be set off for the purposes of corporation tax against the total profits of the claimant company for its corresponding accounting period.

(2)Trading losses, excess capital allowances and a non-trading deficit on the company’s loan relationships are eligible for surrender as group relief even if the surrendering company has other profits of the surrender period against which they could be set.

Further provision about relief in respect of amounts eligible for surrender under this subsection is contained in sections 403ZA to 403ZC.

(3)Charges on income, Schedule A losses and management expenses are available for surrender as group relief only to the extent that in aggregate they exceed the surrendering company’s gross profits for the surrender period.

Any excess surrendered shall be taken to consist first of charges on income, then Schedule A losses, and finally management expenses.

Further provision about relief in respect of amounts available for surrender under this subsection is contained in section 403ZD.

(4)This section has effect subject to—

  • section 404 (limitation of group relief in relation to certain dual resident companies), and

  • sections 492(8) and 494A (oil extraction activities: availability of group relief against ring fence profits).

403ZA Amounts eligible for group relief: trading losses.

(1)For the purposes of section 403 a trading loss means a loss incurred by the surrendering company in the surrender period in carrying on a trade, computed as for the purposes of section 393A(1).

(2)That section does not apply to a trading loss which would be excluded from section 393A(1) by—

(a)section 393A(3) (foreign trades and certain trades not carried on with a view to gain), or

(b)section 397 (farming and market gardening: restriction on loss relief).

(3)Where a company owned by a consortium—

(a)has in any relevant accounting period incurred a trading loss, and

(b)has profits (of whatever description) of that accounting period against which that loss could be set off under section 393A(1),

the amount of the loss available to a member of the consortium on a consortium claim shall be determined on the assumption that the company has made a claim under section 393A(1) requiring the loss to be so set off.

(4)Where the company mentioned in subsection (3) is a group/consortium company, the amount of the loss available under that subsection shall be determined before any reduction is made under section 405(1) to (3).

403ZB Amounts eligible for group relief: excess capital allowances.

(1)For the purposes of section 403 excess capital allowances means capital allowances falling to be made to the surrendering company for the surrender period which—

(a)are to be given by discharge or repayment of tax, and

(b)are to be available primarily against a specified class of income,

to the extent to which their amount exceeds the company’s income of the relevant class arising in that period.

(2)In determining the amount of the allowances falling to be made for the surrender period, no account shall be taken of any allowances carried forward from an earlier period.

(3)The amount of the company’s income of the relevant class means its amount before deduction of—

(a)losses of any other period, or

(b)capital allowances.

403ZC Amounts eligible for group relief: non-trading deficit on loan relationships.

(1)For the purposes of section 403 a non-trading deficit on its loan relationships means a deficit of the surrendering company to which section 83 of the M27Finance Act 1996 applies.

(2)Section 403 applies to such a deficit only to the extent that a claim is duly made under section 83(2) of the Finance Act 1996 for it to be treated as eligible for group relief.

403ZD Other amounts available by way of group relief.

(1)References in section 403 to charges on income, Schedule A losses and management expenses shall be construed as follows.

(2)Charges on income means the aggregate of the amounts paid by the surrendering company in the surrender period by way of charges on income.

(3)A Schedule A loss means a loss incurred by the surrendering company in the surrender period in a Schedule A business carried on by the company.

It does not include—

(a)an amount treated as such a loss by section 392A(2) (losses carried forward from earlier period), or

(b)a loss which would be excluded from section 392A by subsection (5) of that section (certain businesses not carried on with a view to gain).

(4)Management expenses means the aggregate of the amounts disbursed by the surrendering company for the surrender period which are deductible under section 75(1) (expenses of management of investment company).

It does not include an amount deductible only by virtue of section 75(3) or 392A(3) (amounts carried forward from earlier periods).

(5)References in this section to section 75 do not include that section as applied by section 76 to companies carrying on life assurance business.

403ZE Computation of gross profits.

(1)For the purposes of section 403 the surrendering company’s gross profits of the surrender period means its profits for that period—

(a)without any deduction in respect of such losses, allowances and other amounts as are mentioned in paragraph (a) or (b) of subsection (1) of that section, and

(b)without any deduction falling to be made—

(i)in respect of losses, allowances or other amounts of any other period (whether or not of a description within subsection (1) of that section), or

(ii)by virtue of section 75(3) or 392A(3) (other amounts carried forward).

(2)References in this section to section 75 do not include that section as applied by section 76 to companies carrying on life assurance business..

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Marginal Citations

30In Chapter V of Part XII of the Taxes Act 1988 (oil extraction activities), after section 494 insert—E+W+S+N.I.

494A Computation of amount available for surrender by way of group relief.

(1)In section 403(3) (availability of charges, Schedule A losses and management expenses for surrender as group relief) the reference to the gross profits of the surrendering company for an accounting period does not include the company’s relevant ring fence profits for that period.

(2)If for that period—

(a)there are no charges on income paid by the company that are allowable under section 338, or

(b)the only charges on income so allowable are charges to which section 494(3) above applies,

all the company’s ring fence profits are relevant ring fence profits.

(3)In any other case the company’s relevant ring fence profits are so much of its ring fence profits as exceeds the amount of the charges on income paid by the company as—

(a)are allowable under section 338 for that period, and

(b)are not charges to which section 494(3) above applies..

31In Chapter VI of Part XVII of the Taxes Act 1988 (tax avoidance: miscellaneous provisions), after section 768C insert—E+W+S+N.I.

768D Change in ownership of company carrying on property business.

(1)This section applies where there is a change in the ownership of a company carrying on a Schedule A business and—

(a)in the case of an investment company, either—

(i)paragraph (a), (b) or (c) of section 768B(1) applies, or

(ii)section 768C applies;

(b)in the case of a company which is not an investment company, paragraph (a) or (b) of section 768(1) applies.

(2)Where this section applies the following provisions have effect to prevent relief being given under section 392A by setting a Schedule A loss incurred by the company before the change of ownership against profits arising after the change.

(3)The accounting period in which the change of ownership occurs is treated for that purpose as two separate accounting periods, the first ending with the change and the second consisting of the remainder of the period.

(4)The profits or losses of the period in which the change occurs are apportioned to those two periods—

(a)in the case of an investment company—

(i)where paragraph (a), (b) or (c) of section 768B(1) applies, in accordance with Parts II and III of Schedule 28A, or

(ii)where section 768C applies, in accordance with Parts V and VI of that Schedule, and

(b)in the case of a company which is not an investment company, according to the length of the periods,

unless in any case the specified method of apportionment would work unjustly or unreasonably in which case such other method shall be used as appears just and reasonable.

(5)Relief under section 392A(1) against total profits of the same accounting period is available only in relation to each of those periods considered separately.

(6)A loss made in any accounting period beginning before the change of ownership may not be set off under section 392A(2) against, or deducted by virtue of section 392A(3) from—

(a)in the case of—

(i)an investment company where paragraph (a), (b) or (c) of section 768B(1) applies, or

(ii)a company which is not an investment company,

profits of an accounting period ending after the change of ownership;

(b)in the case of an investment company where section 768C applies, from so much of those profits as represents the relevant gain within the meaning of that section.

(7)Subsections (8) and (9) of section 768 (time limits for assessment; information powers) apply for the purposes of this section as they apply for the purposes of that section.

(8)In this section—

(a)any reference to a case where paragraph (a) or (b) of section 768(1) applies includes the case where that paragraph would apply if the reference there to a trade carried on by the company were to a Schedule A business carried on by it;

(b)investment company” has the same meaning as in Part IV.

(9)The provisions of this section apply in relation to an overseas property business as they apply in relation to a Schedule A business..

32In section 769 of the Taxes Act 1988 (rules for ascertaining change of ownership)—E+W+S+N.I.

(a)in subsections (1), (2)(d) and (5) for “and 768C" substitute “ , 768C and 768D ”;

(b)in subsection (3) for “or 768A" substitute “ , 768A or 768D ”; and

(c)in subsection (4) for “or 768C" substitute “ , 768C or 768D ”.

Part IIIE+W+S+N.I. Minor and consequential amendments

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Commencement Information

I18Sch. 5 Pts. I-III in force and has effect as mentioned in s. 38.

Taxes Management Act 1970 (c. 9)E+W+S+N.I.

F733. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S+N.I.

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Amendments (Textual)

F7Sch. 5 para. 33 repealed (31.7.1998 with effect as mentioned in s. 117, Sch. 27 Pt. III(28), Note) by 1998 c. 36, s. 165, Sch. 27 Pt. III(28)

Income and Corporation Taxes Act 1988 (c.1)E+W+S+N.I.

34In section 87(1) of the Taxes Act 1988 (treatment of taxable premiums in case of land used in connection with trade, profession or vocation), for paragraphs (a) and (b) substitute—E+W+S+N.I.

(a)any amount falls to be treated as a receipt of a Schedule A business by virtue of section 34 or 35, or

(b)any amount would fall to be so treated but for the operation of section 37(2) or (3);.

35In section 118 of the Taxes Act 1988 (limited partnerships: restriction on relief)—E+W+S+N.I.

(a)in the opening words of subsection (1), and

(b)in subsection (2), in the definition of “the aggregate amount",

for “403(1) to (3) and (7)" substitute “ 403 ”.

36In section 400 of the Taxes Act 1988 (loss relief: effect of write-off of government investment), in subsection (2) after paragraph (b) insert—E+W+S+N.I.

(bb)any losses which—

(i)under section 392A(2) or 392B are carried forward to the next accounting period, or

(ii)under section 392A(3) are treated as management expenses disbursed in the next accounting period;.

37(1)Section 404 of the Taxes Act 1988 (limitation of group relief in relation to dual resident investment companies) is amended as follows.E+W+S+N.I.

(2)In subsection (2), for paragraph (a) substitute—

(a)in which the trading loss or Schedule A loss is incurred; or

(aa)in which the non-trading deficit on the company’s loan relationships arises; or.

(3)In subsection (6), omit paragraph (c).

38In section 413(6) of the Taxes Act 1988 (interpretation: meaning of company being owned by consortium), for “403(10)" substitute “ 403ZA(3) ”.E+W+S+N.I.

39In Chapter I of Part XII of the Taxes Act 1988 (insurance companies), after section 432A insert—E+W+S+N.I.

432AA Schedule A business or overseas property business.

(1)An insurance company is treated as carrying on separate Schedule A businesses, or overseas property businesses, in accordance with the following rules.

(2)The exploitation of land held as an asset of the company’s long term business fund is treated as a separate business from the exploitation of land not so held.

(3)The exploitation of land held as an asset of the company’s overseas life assurance fund is treated as a separate business from the exploitation of other land held as an asset of its long term business fund.

(4)The exploitation of land held as an asset linked to any of the following categories of business is regarded as a separate business—

(a)pension business;

(b)life reinsurance business;

(c)basic life assurance and general annuity business;

(d)long term business other than life assurance business.

(5)Accordingly, the exploitation of land held as an asset of the company’s long term business fund otherwise than as mentioned in subsection (3) or (4) is treated as a separate business from any other.

(6)In this section “land” means any estate, interest or rights in or over land.

432AB Losses from Schedule A business or overseas property business.

(1)This section applies to any loss arising in a Schedule A business or overseas property business.

(2)A loss arising from any category of business mentioned in section 432A(2) shall be apportioned under that section in the same way as income.

(3)So far as a loss is referable to basic life assurance and general annuity business, it shall be treated as if it were an amount of expenses of management under section 76 disbursed for the accounting period in which the loss arose.

(4)Where a company is treated under section 432AA as carrying on—

(a)more than one Schedule A business, or

(b)more than one overseas property business,

then, in relation to either kind of business, the reference in subsection (3) above to a loss referable to basic life assurance and general annuity business shall be construed as a reference to any aggregate net loss after setting the losses from those businesses which are so referable against any profits from those businesses that are so referable.

(5)The provisions of section 392A or 392B (loss relief) do not apply to a loss referable to life assurance business or any category of life assurance business.

(6)Where a company is treated under section 432AA as carrying on—

(a)more than one Schedule A business, or

(b)more than one overseas property business,

and, in relation to either kind of business, there are losses and profits referable to business which is not life assurance business, those losses shall be set against those profits before being used under section 392A or 392B..

F840. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S+N.I.

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Amendments (Textual)

F8Sch. 5 para. 40 repealed (22.3.2001 with effect as mentioned in s. 579 of the amending Act) by 2001 c. 2, ss. 579, 580, Sch. 4

41In section 441B of the Taxes Act 1988 (treatment of UK land linked to a company’s overseas life assurance business), after subsection (2) insert—E+W+S+N.I.

(2A)For the purposes of subsection (2) above a Schedule A business for the exploitation of any land to which this section applies shall be treated as a separate business from any other such business..

42For section 503 of the Taxes Act 1988 (letting of furnished holiday accommodation treated as a trade) substitute—E+W+S+N.I.

503 Letting of furnished holiday accommodation treated as a trade for certain purposes.

(1)For the purposes specified in subsection (2)—

(a)a Schedule A business which consists in, or so far as it consists in, the commercial letting of furnished holiday accommodation in the United Kingdom shall be treated as if it were a trade the profits of which are chargeable to tax under Case I of Schedule D, and

(b)all such lettings made by a particular person or partnership or body of persons shall be treated as one trade.

The “commercial letting of furnished holiday accommodation” is defined below in section 504.

(2)Subsection (1) above applies for the purposes of—

(a)Chapters I and II of Part X (loss relief for income tax and corporation tax), and

(b)sections 623(2)(c), 644(2)(c) and 833(4)(c) (income regarded as relevant earnings for pension purposes or as earned income).

(3)Chapter I of Part X (loss relief for income tax) as applied by this section has effect with the following adaptations—

(a)no relief shall be given to an individual under section 381 (relief for losses in early years of trade) in respect of a year of assessment if any of the accommodation in respect of which the trade is carried on in that year was first let by that person as furnished accommodation more than three years before the beginning of that year of assessment;

(b)section 384 (restrictions on right of set-off) has effect with the omission of subsections (6) to (8) and the words after paragraph (b) in subsection (10) (which relate to certain losses attributable to capital allowances);

(c)section 390 (treatment of interest as loss) has effect as if the reference to a trade the profits of which are chargeable to tax under Case I of Schedule D were a reference to the Schedule A business so far as it is treated as a trade.

(4)Where there is a letting of accommodation only part of which is holiday accommodation, such apportionments shall be made for the purposes of this section as are just and reasonable.

(5)Relief shall not be given for the same loss, or the same portion of a loss, both under a provision of Part X as applied by this section and under any other provision of the Tax Acts..

43In section 579 of the Taxes Act 1988, omit subsection (4) and in subsection (5) (twice) for “subsections (2), (3) and (4)" substitute “ subsections (2) and (3) ”.E+W+S+N.I.

44In section 787(3) of the Taxes Act 1988 (restriction of relief for payments of interest) for “section 403(7)" substitute “ section 83(2)(b) of the Finance Act 1996 (claim to treat non-trading deficit as eligible for group relief) ”.E+W+S+N.I.

45In section 832(1) of the Taxes Act 1988 (interpretation), at the appropriate place insert—E+W+S+N.I.

overseas property business” has the meaning given by section 65A(4) or 70A(4);.

46In Schedule 26 to the Taxes Act 1988 (allowance of reliefs against amounts apportioned in respect of profits of controlled foreign companies), in paragraph 1(3)(a) for “section 393A(1)" substitute “ section 392A(1) or 393A(1) ”.E+W+S+N.I.

Capital Allowances Act 1990 (c.1)E+W+S+N.I.

F947. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S+N.I.

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Amendments (Textual)

F9Sch. 5 para. 47 repealed (22.3.2001 with effect as mentioned in s. 579 of the amending Act) by 2001 c. 2, ss. 579, 580, Sch. 4

F1048. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S+N.I.

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Amendments (Textual)

F10Sch. 5 para. 48 repealed (22.3.2001 with effect as mentioned in s. 579 of the amending Act) by 2001 c. 2, ss. 579, 580, Sch. 4

F1149. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S+N.I.

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Amendments (Textual)

F11Sch. 5 para. 49 repealed (22.3.2001 with effect as mentioned in s. 579 of the amending Act) by 2001 c. 2, ss. 579, 580, Sch. 4

F1250. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S+N.I.

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Amendments (Textual)

F12Sch. 5 para. 50 repealed (22.3.2001 with effect as mentioned in s. 579 of the amending Act) by 2001 c. 2, ss. 579, 580, Sch. 4

F1351. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S+N.I.

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Amendments (Textual)

F13Sch. 5 para. 51 repealed (22.3.2001 with effect as mentioned in s. 579 of the amending Act) by 2001 c. 2, ss. 579, 580, Sch. 4

F1452. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S+N.I.

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Amendments (Textual)

F14Sch. 5 para. 52 repealed (22.3.2001 with effect as mentioned in s. 579 of the amending Act) by 2001 c. 2, ss. 579, 580, Sch. 4

F1553. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S+N.I.

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Amendments (Textual)

F15Sch. 5 para. 53 repealed (22.3.2001 with effect as mentioned in s. 579 of the amending Act) by 2001 c. 2, ss. 579, 580, Sch. 4

F1654. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S+N.I.

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Amendments (Textual)

F16Sch. 5 para. 54 repealed (22. 3. 2001 with effect as mentioned in s. 579 of the amending Act) by 2001 c. 2, ss. 579, 580, Sch. 4

F1755. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S+N.I.

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Amendments (Textual)

F17Sch. 5 para. 55 repealed (22.3.2001 with effect as mentioned in s. 579 of the amending Act) by 2001 c. 2, ss. 579, 580, Sch. 4

F1856. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S+N.I.

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Amendments (Textual)

F18Sch. 5 para. 56 repealed (22.3.2001 with effect as mentioned in s. 579 or the amending Act) by 2001 c. 2, ss. 579, 580, Sch. 4

F1957. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S+N.I.

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Amendments (Textual)

F19Sch. 5 para. 57 repealed (22.3.2001 with effect as mentioned in s. 579 of the amending Act) by 2001 c. 2, ss. 579, 580, Sch. 4

F2058. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S+N.I.

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F20Sch. 5 para. 58 repealed (22.3.2001 with effect as mentioned in s. 579 of the amending Act) by 2001 c. 2, ss. 579, 580, Sch. 4

F2159. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S+N.I.

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F21Sch. 5 para. 59 repealed (22.3.2001 with effect as mentioned in s. 579 of the amending Act) by 2001 c. 2, ss. 579, 580, Sch. 4

F2260. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S+N.I.

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F22Sch. 5 para. 60 repealed (22.3.2001 with effect as mentioned in s. 579 of the amending Act) by 2001 c. 2, ss. 579, 580, Sch. 4

F2361. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S+N.I.

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F23Sch. 5 para. 61 repealed (22.3.2001 with effect as mentioned in s. 579 of the amending Act) by 2001 c. 2, ss. 579, 580, Sch. 4

Taxation of Chargeable Gains Act 1992 (c.12)E+W+S+N.I.

62In section 241(3) of the Taxation of Chargeable Gains Act 1992 (commercial letting of furnished holiday accommodation to be treated as trade for certain purposes), for paragraph (a) substitute—E+W+S+N.I.

(a)any Schedule A business (within the meaning of the Taxes Act) which consists in the commercial letting of furnished holiday accommodation in the United Kingdom shall be treated as a trade, and.

63(1)Schedule 8 to the Taxation of Chargeable Gains Act 1992 (leases) is amended as follows.E+W+S+N.I.

(2)In paragraph 5 (exclusion of premiums taxed under Schedule A, etc.)—

(a)in sub-paragraphs (1) and (2), for “income tax has become chargeable under section 34 of the Taxes Act on any amount" substitute “ any amount is brought into account by virtue of section 34 of the Taxes Act as a receipt of a Schedule A business (within the meaning of that Act) ”; and

(b)in sub-paragraph (3), for “income tax has become chargeable under section 36 of the Taxes Act (sale of land with right of re-conveyance) on any amount" substitute “ any amount is brought into account by virtue of section 36 of the Taxes Act (sale of land with right of re-conveyance) as a receipt of a Schedule A business (within the meaning of that Act) ”.

(3)In paragraph 6(2), for the words from “on which tax is paid" onwards substitute “ brought into account by virtue of section 35 of the Taxes Act (charge on assignment of a lease granted at an undervalue) as a receipt of a Schedule A business (within the meaning of that Act) ”.

(4)In paragraph 7, for the words from “income tax" to “so chargeable" substitute “ any amount is brought into account by virtue of section 34(2) and (3) of the Taxes Act as a receipt of a Schedule A business (within the meaning of that Act) which is or is treated as carried on by any person, that person ”.

(5)For paragraph 7A substitute—

7AReferences in paragraphs 5 to 7 above to an amount brought into account as a receipt of a Schedule A business include references to an amount brought into account as a receipt of an overseas property business..

Finance Act 1996 (c. 8)E+W+S+N.I.

64(1)Schedule 8 to the Finance Act 1996 (loan relationships: claims relating to deficits) is amended as follows.E+W+S+N.I.

(2)In paragraph 1 (claim to set off deficit against other profits for the same period), in sub-paragraph (3)(b) for paragraph (i) substitute—

(i)under section 392A(1) or 393A(1) of the Taxes Act 1988 (losses set against profits for the same or preceding accounting periods); or.

(3)In paragraph 2 (claim to treat deficit as eligible for group relief) for sub-paragraph (2) substitute—

(2)Section 403 of the Taxes Act 1988 (amounts which may be surrendered by way of group relief) applies in accordance with section 403ZC(2) of that Act..

Part IVE+W+S+N.I. Transitional provisions for corporation tax

IntroductionE+W+S+N.I.

65(1)This Part of this Schedule makes provision with respect to the application of the provisions of Parts I to III of this Schedule for corporation tax purposes.E+W+S+N.I.

(2)In this Part of this Schedule—

  • before commencement” and “after commencement” mean, respectively, before 1st April 1998 and on or after that date; and

  • the new rules” means the provisions of the Tax Acts relating to Schedule A taxation or, as the case may be, to the taxation under Case V of Schedule D of income from land outside the United Kingdom, as they have effect after commencement.

Receipts and expenses not to be counted twiceE+W+S+N.I.

66(1)To the extent that receipts or expenses have been taken into account before commencement, they shall not be taken into account again under the new rules after commencement.E+W+S+N.I.

(2)Nothing in section 43 of the M28Finance Act 1989 (computation of profits: effect of delayed payment of emoluments) shall be construed as affecting the rule in sub-paragraph (1) above.

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Marginal Citations

Receipts and expenses not to be left out of accountE+W+S+N.I.

67To the extent that receipts or expenses would under the new rules have been brought into account before commencement, and were not so brought into account, they shall be brought into account immediately after commencement.E+W+S+N.I.

Expenses not to be carried back to before commencementE+W+S+N.I.

68Expenses which were incurred before commencement but were not taken into account before commencement shall not, by virtue of section 25(3) or 31(3) of the Taxes Act 1988, be carried back and taken into account before commencement.E+W+S+N.I.

Effect of transfer of underlying rightsE+W+S+N.I.

69If any estate, interest or rights in or over land is or are transferred from one person to another, the references in paragraphs 66 to 68 to receipts or expenses being taken into account shall be construed as references to their being taken into account in relation to either of those persons.E+W+S+N.I.

Bad debt reliefE+W+S+N.I.

70(1)Where relief under section 41 of the Taxes Act 1988 (relief for rent, etc. not paid) has been given in respect of an amount before commencement, any receipt after commencement shall be taken into account under the new rules.E+W+S+N.I.

(2)Any writing off of an amount after commencement shall be taken into account under the new rules, even where it relates to a receipt brought into account before commencement.

Meaning of “taken into account"E+W+S+N.I.

71For the purposes of paragraphs 66 to 70 an amount is “taken into account” if—E+W+S+N.I.

(a)it is brought into account for tax purposes, or

(b)it would have been so brought into account if the person concerned were chargeable to tax.

Unrelieved Case VI lossesE+W+S+N.I.

72(1)A loss to which this paragraph applies which a company would, apart from this Schedule, have been entitled to carry forward under section 396 of the Taxes Act 1988 (Case VI losses) shall be treated after commencement as a loss of an earlier period within section 392A or 392B of that Act and accordingly available to be set off under those provisions.E+W+S+N.I.

(2)This paragraph applies to a loss sustained in a business or transaction of a kind that after commencement would be treated as carried on or entered into in the course of a Schedule A business or overseas property business carried on by the company.

Source ceasing in transitional accounting periodE+W+S+N.I.

73(1)The provisions of Parts I to III of this Schedule do not apply in relation to a source which ceases in the course of a company’s transitional accounting period to be a source within the charge to tax under Schedule A or Case V or VI of Schedule D in relation to that company and any other person.E+W+S+N.I.

(2)This paragraph does not apply if the company acquired the source in that accounting period or in the preceding twelve months.

Superseded provisions relating to finance leasingE+W+S+N.I.

74(1)In Schedule 12 to the M29Finance Act 1997 (leasing arrangements: finance leases and loans), the following provisions (which apply concepts from Case I of Schedule D in relation to rent taxed under Schedule A) shall cease to have effect in accordance with this paragraph.E+W+S+N.I.

(2)Paragraphs 3(6), 6(9)(b), 8(1) to (7) and 20(b) do not apply in relation to periods of account beginning on or after 1st April 1998.

A “period of account” means a period for which accounts are made up.

(3)Paragraph 8(8) does not apply if the time mentioned in that provision is on or after 1st April 1998.

(4)Paragraph 8(9) does not apply if the time mentioned in paragraph (a) of that provision is on or after 1st April 1998.

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Marginal Citations

Computation of amounts available for surrender as group reliefE+W+S+N.I.

75In computing under section 403 of the Taxes Act 1988 the amounts available for surrender as group relief in a company’s transitional accounting period, the amounts referable to the period before commencement shall be computed separately from the amounts referable to the period after commencement.E+W+S+N.I.

Meaning of “transitional accounting period"E+W+S+N.I.

76For the purposes of paragraphs 73 and 75 a “transitional accounting period” means an accounting period beginning before, and ending on or after, 1st April 1998.E+W+S+N.I.

Section 44.

F24SCHEDULE 6E+W+S+N.I. Adjustment on change of accounting basis

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

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F24Sch. 6 repealed (24.7.2002 with effect as mentioned in Sch. 40 Pt. 3(8) Note 2 of the amending Act) by 2002 c. 23, s. 141, Sch. 40 Pt. 3(8) Note 2

Modifications etc. (not altering text)

C1Sch. 6 excluded (24.7.2002) by 2002 c. 23, s. 64(6)

Section 46(3).

SCHEDULE 7E+W+S+N.I. Removal of unnecessary references to gains

The following are the provisions of the Taxes Acts in which the amendments specified in section 46(3) are to be made.

1In the Taxes Act 1988: sections 53(1) and (3), 55(1), 60(1) and (2) (twice), 61(1) (twice), 63A(1), (3) and (5), 65(2A) and (5)(b), 65A(2), 68(1), 74(1) opening words and paragraph (m), 77(1) and (2)(a)(i), 79(1), 79A(1), 80(10), 82(1) and (5), 83, 84A(2)(a), 85(1)(a), 85A(2)(a), 86(2) definition of “deductible", 86A(2)(a), 87(2) and (6), 88(a), 89 (twice), 90(1)(a), 91(1) and (4)(a)(i), 91A(2) and (3)(a), 91B(2), (5)(a) and (6)(a), 91C(b), 94(1), 96(7), 97, 99(1) and (2), 100(1), (1D) and (1E) (twice each), 101(1) (twice) and (2)(a), 102(1), 103(1), (2)(a) (twice), (2)(b) (twice), (4)(a) and (5), 104(1) (twice), (2), (4), (5) and (7), 105(1)(a) (twice) and (4), 106(2), 107, 109(1)(b), 109A(2)(d), (4) and (4A), 110(3) (twice), (4) and (5) (three times), 110A(1), 111(2), (3) and (4) (twice), (7) (twice), (8)(a) and (11), 112(1A) and (1B), 113(1), 117(1), (3)(b) and (4), 118(1), 160(1C)(b), 291A(3)(f)(ii) (twice), 368(3) and (4)(a), 375A(1)(b), 379A(1)(a), (1)(b) (twice) and (7), 382(3), 385(4) (three times), 386(1), 388(1), (4) (four times), (5) (in the first two places) and (7), 400(6), 401(1)(b), 486(10) (twice), 491(3) (twice), (4), (5), (6), (8)(b) (twice) and (11), 509(1) (twice), 526(1)(b), F26. . ., 556(3)(a), 557 side note, (1) (twice) and (2)(a), (b) and (c), F27. . . 568(1), 570(1), 577(1)(a) and (9), 577A(1) and (1A), 579(2), 588(3), 589A(8), 730C(1), 770(2)(a)(iii) and (b)(iii), 776(6)(a) and (b), 779(13)(b), 780(3)(a), 781(4)(a) and (5)(b), 782(1)(a), (2) and (3), 785 definition of “capital sum” where the words first occur, 830(4) in the second place, Schedule 5, paragraphs 1(1), 2(6) meaning of “qualifying year of assessment", 3(1) and (4)(b), 5(1), 6(4) meaning of “qualifying year of assessment" and (5) and 8(7) (three times), Schedule 21, paragraph 6(1)(b) and (3) (twice).E+W+S+N.I.

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Amendments (Textual)

F26Words in Sch. 7 para. 1 repealed (22.3.2001 with effect as mentioned in s. 579 of the amending Act) by 2001 c. 2, ss. 579, 580, Sch. 4

F27Words in Sch. 7 para. 1 repealed (24.7.2002 with effect as mentioned in Sch. 40 Pt. 3(1) Note of the amending Act) by 2002 c. 23, s. 141, Sch. 40 Pt. 3(1) Note

2In the M30Finance Act 1988: section 73(2), Schedule 12, paragraph 2(2).E+W+S+N.I.

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Marginal Citations

3In the M31Finance Act 1989: sections 67(2)(a), 76(1) and (4)(a) and 112(1).E+W+S+N.I.

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Marginal Citations

F284. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S+N.I.

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F28Sch. 5 para. 4 repealed (22.3.2001 with effect as mentioned in s. 579 of the amending Act) by 2001 c. 2, ss. 579, 580, Sch. 4

5In the M32Finance Act 1990: section 126(2).E+W+S+N.I.

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Marginal Citations

6In the M33Finance Act 1991: section 121.E+W+S+N.I.

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Marginal Citations

7In the M34Taxation of Chargeable Gains Act 1992: sections 39(1) (in the first place) and (2) (in both places), 41(4) and (5) and 164L(8) (twice).E+W+S+N.I.

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Marginal Citations

8In the M35Finance (No. 2) Act 1992: section 42(8) and Schedule 12, paragraphs F29. . . 4(2) (twice).E+W+S+N.I.

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Amendments (Textual)

F29Words in Sch. 7 para. 8 repealed (24.7.2002 with effect as mentioned in Sch. 40 Pt. 3(18) Note of the amending Act) by 2002 c. 23, s. 141, Sch. 40 Pt. 3(18) Note

Marginal Citations

9In the M36Finance Act 1994: Schedule 24, paragraph 12(2).E+W+S+N.I.

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10In the M37Finance Act 1995: section 126(6) and (7).E+W+S+N.I.

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11In the M38Finance Act 1996: sections 80(2) (in the second place) and 82(2)(a) and (b).E+W+S+N.I.

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12In the M39Finance Act 1997: Schedule 12, paragraph 8(4)(a).E+W+S+N.I.

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Section 57.

SCHEDULE 8E+W+S+N.I. Sub-contractors in the construction industry

IntroductoryE+W+S+N.I.

1Chapter IV of Part XIII of the Taxes Act 1988 shall be amended in accordance with paragraphs 2 to 6 below.E+W+S+N.I.

Application of deductions to public departments etcE+W+S+N.I.

2F30(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S+N.I.

(2)In subsection (2) of section 560 (persons who are contractors) after “applies" there shall be inserted “ (subject to subsection (2A) below) ”; and after that subsection there shall be inserted the following subsections—

(2A)Subject to subsection (2B) below, subsection (2) above does not apply at any time to an office, department or body falling within paragraph (aa), (b), (c), (d), (e) or (ea) of that subsection unless that office, department or body has, in the period of three years ending with the 31st March next before that time, had an average annual expenditure on construction operations of more than £1,000,000.

(2B)Where the condition provided for in subsection (2A) above has been satisfied in the case of any office, department or body in relation to any period of three years, that subsection shall not prevent subsection (2) above from applying to that office, department or body until there have been three successive years after the end of that period in each of which the office, department or body has had expenditure on construction operations of less than £1,000,000.

(3)This paragraph has effect in relation to any payments made on or after the day, or first day, that is appointed under subsection (3) of section 139 of the M40Finance Act 1995 (commencement of changes to sub-contractors scheme) for the purposes of paragraph 2 of Schedule 27 to that Act (additional public bodies etc that may be contractors).

(4)The reference in subsection (2B) of section 560 of the Taxes Act 1988 to a period of three years in relation to which the condition provided for in subsection (2A) of that section has been satisfied does not include a reference to any such period ending more than a year before the day or, as the case may be, first day mentioned in sub-paragraph (3) above.

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Amendments (Textual)

F30Sch. 8 para. 2(1) repealed (24.7.2002 with effect as mentioned in Sch. 40 Pt. 3(1) Note of the amending Act) by 2002 c. 23, s. 141, Sch. 40 Pt. 3(1) Note

Marginal Citations

Conditions for exemption of partnershipsE+W+S+N.I.

[F313(1)In subsection (2A) of section 564 (certificates for partnerships), for the words from “that" to the end there shall be substituted that the carrying on of the firm’s business is likely to involve— E+W+S+N.I.

(a)the receipt, annually in the period to which the certificate would relate, of an aggregate amount by way of relevant payments which is not less than the sum specified in subsection (2B) below; or

(b)the receipt, annually in the period to which the certificate would relate, of an aggregate amount by way of construction contract payments which is not less than the amount specified for the purposes of this paragraph in regulations made by the Board.

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

(2AA)In subsection (2A)(a) above “relevant payments” has the meaning given by section 562(2B).

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

(2C)In subsection (2A)(b) above “construction contract payments” means payments under contracts relating to, or to the work of individuals participating in the carrying out of, any operations which—

(a)are of a description specified in subsection (2) of section 567; but

(b)are not of a description specified in subsection (3) of that section,

other than so much of the payments as represents the direct cost to the firm of materials used or to be used in carrying out the operations in question.]

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Amendments (Textual)

F31Sch. 8 para. 3 repealed (27.7.1999 with effect as mentioned in s. 53(3) of the amending Act) by 1999 c. 16, s. 139, Sch. 20 Pt. III(11), Note

Conditions of exemption for companiesE+W+S+N.I.

[F324(1)For subsections (2A) and (2B) of section 565 (certificates for companies) there shall be substituted the following subsections—E+W+S+N.I.

(2A)The company must either—

(a)satisfy the Board, by such evidence as may be prescribed in regulations made by them, that the annual receipts test is satisfied; or

(b)satisfy the Board that the only persons with shares in the company are companies which are limited by shares and themselves excepted from section 559 by virtue of a certificate which is in force under section 561.

(2B)The annual receipts test is satisfied in relation to a company if the carrying on of its business is likely to involve the receipt, annually in the period to which the certificate would relate—

(a)of an aggregate amount by way of relevant payments which is not less than the amount obtained by multiplying the amount specified in regulations as the minimum turnover for the purposes of section 562(2A) by the number of persons who are relevant persons in relation to the company; or

(b)of an aggregate amount by way of construction contract payments which is not less than the amount specified for the purposes of this paragraph in regulations made by the Board.

(2BB)In subsection (2B) above “relevant payments” has the meaning given by section 562(2B).

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

(2D)In subsection (2B) above “construction contract payments” means payments under contracts relating to, or to the work of individuals participating in the carrying out of, any operations which—

(a)are of a description specified in subsection (2) of section 567; but

(b)are not of a description specified in subsection (3) of that section,

other than so much of the payments as represents the direct cost to the company of materials used or to be used in carrying out the operations in question.]

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F32Sch. 8 para. 4 repealed (27.7.1999 with effect as mentioned in s. 53(3) of the amending Act) by 1999 c. 16, s. 139, Sch. 20 Pt. III(11), Note

Commencement of paragraphs 3 and 4E+W+S+N.I.

[F335Paragraphs 3 and 4 above have effect in relation to any application for the issue or renewal of a certificate under section 561 of the M41Taxes Act 1988 in relation to which paragraphs 3(1) and 4 to 7 of Schedule 27 to the Finance Act 1995 (which amend sections 564 and 565 of the Taxes Act 1988) have effect in accordance with paragraph 8(1) of that Schedule.]E+W+S+N.I.

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F33Sch. 8 para. 5 repealed (27.7.1999 with effect as mentioned in s. 53(3) of the amending Act) by 1999 c. 16, s. 139, Sch. 20 Pt. III(11), Note

Marginal Citations

Powers to make regulationsE+W+S+N.I.

6In section 566 (powers to make regulations under Chapter IV), the following subsections shall be inserted after subsection (3)—E+W+S+N.I.

(4)Any power under this Chapter to make regulations authorising or requiring a document (whether or not of a particular description), or any records or information, to be issued, given or requested or to be sent, produced, returned or surrendered to the Board shall include power—

(a)to authorise the Board to nominate a person who is not an officer of the Board to be the person who on behalf of the Board—

(i)issues, gives or requests the document, records or information; or

(ii)is the recipient of the document, records or information;

and

(b)to require the document, records or information, in cases prescribed by or determined under the regulations, to be sent, produced, returned or surrendered to the address (determined in accordance with the regulations) of the person nominated by the Board to receive it on their behalf.

(5)Any power under this Chapter to make regulations imposing requirements with respect to any description of document, with respect to documents generally or with respect to any records or information shall include power to make provision, subject to such conditions as may be prescribed by or determined in accordance with the regulations—

(a)for the documents, records or information to be allowed to take an electronic form so prescribed or determined;

(b)for the issue, completion, furnishing, production, keeping, cancellation, return, surrender or giving of the documents, records or information to be something that has to be or may be done by the electronic means so prescribed or determined; and

(c)for the manner of proving in any proceedings the contents or transmission of anything that, by virtue of any regulations under this Chapter, takes an electronic form or is transmitted to any person by electronic means.

Transitional provision for commencement of 1995 Act amendmentsE+W+S+N.I.

7An order under subsection (3) of section 139 of the M42Finance Act 1995 (commencement of changes to sub-contractors scheme) appointing a day for the purposes of a provision of that section or Schedule 27 to that Act may also provide that certificates under section 561 of the Taxes Act 1988 which have been issued or renewed before the making of the order for periods ending on or after the appointed day are to cease to have effect at the end of the day immediately preceding the appointed day.E+W+S+N.I.

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Marginal Citations

Section 58(2).

SCHEDULE 9E+W+S+N.I. Payments and other benefits in connection with termination of employment etc

Part IE+W+S+N.I. Schedule 11 to the Taxes Act 1988

The Schedule substituted for Schedule 11 to the Taxes Act 1988 is as follows:—

Schedule 11E+W+S+N.I. Payments and other benefits in connection with termination of employment, etc.
IntroductoryE+W+S+N.I.

1The provisions of this Schedule supplement the provisions of section 148 with respect to the taxation of payments and other benefits received in connection with—

(a)the termination of a person’s employment, or

(b)any change in the duties of or emoluments from a person’s employment.

Payments and other benefits to which section 148 appliesE+W+S+N.I.

2(1)Section 148 applies to all payments and other benefits received directly or indirectly in consideration or in consequence of, or otherwise in connection with, the termination or change—

(a)by the employee or former employee,

(b)by the spouse or any relative or dependant of the employee or former employee, or

(c)by the personal representatives of the former employee.

(2)For the purposes of section 148 a payment or other benefit which is provided on behalf of, or to the order of, the employee or former employee is treated as received by the employee or former employee.

Payments and other benefits excluded from charge under section 148E+W+S+N.I.

3Tax is not charged under section 148 on a payment or other benefit provided—

(a)in connection with the termination of the employment by the death of the employee, or

(b)on account of injury to or disability of the employee.

4(1)Tax is not charged under section 148 on a payment or other benefit provided in pursuance of any such scheme or fund as was described in section 221(1) and (2) of the 1970 Act or as is described in section 596(1) (approved retirement benefits schemes, etc) in the following cases.

(2)The first case is where the payment or other benefit is by way of compensation for loss of employment, or for loss or diminution of emoluments, and the loss or diminution is due to ill-health.

(3)The second case is where the payment or other benefit is properly regarded as earned by past service.

5Tax is not charged under section 148 on a payment or other benefit provided—

(a)under a Royal Warrant, Queen’s Order or Order in Council relating to members of Her Majesty’s forces, or

(b)by way of payment in commutation of annual or other periodical payments authorised by any such Warrant or Order.

6(1)Tax is not charged under section 148 on—

(a)any benefit provided under a superannuation scheme administered by the government of an overseas territory within the Commonwealth, or

(b)any payment of compensation for loss of career, interruption of service or disturbance made in connection with any change in the constitution of any such overseas territory to a person who, before the change, was employed in the public service of that territory.

(2) In sub-paragraph (1) references to an overseas territory, to the government of such a territory, and to employment in the public service of such a territory have the same meaning as in the M43 Overseas Development and Cooperation Act 1980: see sections 10(2) and 13(1) and (2) of that Act.

Application of £30,000 thresholdE+W+S+N.I.

7(1)This pargraph specifies how the £30,000 threshold in section 148(1) applies.

(2)Tax is charged only on the excess over £30,000, but the threshold applies to the aggregate amount of payments and other benefits provided in respect of the same person—

(a)in respect of the same employment, or

(b)in respect of different employments with the same employer or associated employers (see paragraph 8).

(3)If payments and other benefits are received in different tax years, the £30,000 is set against the amount of payments and other benefits received in earlier years before those of later years.

(4)If more than one payment or other benefit is received in a tax year in which the threshold is exceeded—

(a)the £30,000 (or the balance of it) is set against the amounts of cash benefits as they are received, and

(b)any balance at the end of the year is set against the aggregate amount of non-cash benefits received in the year.

8(1)For the purposes of paragraph 7(2)(b) employers are associated if on the date which is the relevant date in relation to any of the payments or other benefits—

(a)one of them is under the control of the other, or

(b)one of them is under the control of a third person who controls or is under the control of the other on that or any other such date.

(2)In sub-paragraph (1)—

(a)control” has the meaning given by section 840, and

(b)references to an employer, or to a person controlling or controlled by an employer, include the successors of the employer or person.

Exclusion or reduction of charge in case of foreign serviceE+W+S+N.I.

9(1)If the employee’s service in the employment in respect of which the payment or other benefit is received included foreign service, then—

(a)in certain cases, tax is not charged under section 148 (see paragraph 10);

(b)in other cases the amount charged to tax is reduced (see paragraph 11).

(2)“Foreign service" for this purpose means—

(a)service in or after the tax year 1974-75 such that—

(i)the emoluments from the employment were not chargeable under Case I of Schedule E (or would not have been so chargeable, had there been any), or

(ii)a deduction equal to the whole amount of the emoluments from the employment was or would have been allowable under paragraph 1 of Schedule 2 to the M44Finance Act 1974, paragraph 1 of Schedule 7 to the M45Finance Act 1977 or section 192A or 193(1) of this Act (foreign earnings deduction);

(b)service before the tax year 1974-75 such that tax was not chargeable in respect of the emoluments of the employment—

(i)in the tax year 1956-57 or later, under Case I of Schedule E;

(ii)in earlier tax years, under Schedule E.

10Tax is not charged under section 148 if foreign service comprises—

(a)three-quarters or more of the whole period of service down to the relevant date, or

(b)if the period of service down to the relevant date exceeded ten years, the whole of the last ten years, or

(c)if the period of service down to the relevant date exceeded 20 years, one-half or more of that period, including any ten of the last 20 years.

11(1)Where there is foreign service and paragraph 10 does not apply, the person chargeable to tax under section 148 may claim relief in the form of a proportionate reduction of the amount charged to tax.

The amount charged to tax means the amount after any reduction under paragraph 7 (application of £30,000 threshold).

(2)The proportion is that which the length of the foreign service bears to the whole length of service in the employment before the relevant date.

(3)A person is not entitled to relief under this paragraph in so far as the relief, together with any personal relief allowed to him, would reduce the amount of income on which he is chargeable below the amount of income tax which he is entitled—

(a)to charge against any other person, or

(b)to deduct, retain or satisfy out of any payment which he is liable to make.

(4)For the purposes of sub-paragraph (3)—

(a)personal relief” means relief under Chapter I of Part VII; and

(b)the amount of tax to which a person is or would be chargeable means the amount of tax to which he is or would be chargeable either by assessment or by deduction.

Valuation of benefitsE+W+S+N.I.

12(1)For the purposes of section 148, the amount of a payment or other benefit is taken to be—

(a)in the case of a cash benefit, the amount received, and

(b)in the case of a non-cash benefit, the cash equivalent of the benefit.

(2)The cash equivalent of a non-cash benefit is whichever is the greater of—

(a)the amount which would be chargeable to tax under section 19(1) if the benefit were an emolument of the employment chargeable to tax under Case I of Schedule E, or

(b)the cash equivalent determined in accordance with the provisions of section 596B (cash equivalent of benefits in kind for purposes of charge to tax on benefits under non-approved retirement benefits scheme).

Notional interest treated as paid if amount charged in respect of beneficial loanE+W+S+N.I.

13(1)This paragraph applies where a person is chargeable to tax under section 148 in any tax year on an amount which consists of or includes an amount representing the cash equivalent of the benefit of a loan determined in accordance with Part II of Schedule 7.

(2)Where this paragraph applies, the person chargeable is treated as having paid interest on the loan of the same amount as the cash equivalent so determined.

This is subject to application of the £30,000 threshold: see sub-paragraph (5) below.

(3)The interest is treated as paid for all the purposes of the Tax Acts (other than section 148 and this Schedule), but not so as to make it—

(a)income of the person making the loan, or

(b)relevant loan interest to which section 369 applies (mortgage interest payable under deduction of tax).

(4)The interest is treated as accruing during and paid at the end of the tax year or, if different, the period in the tax year during which the loan is outstanding.

(5)No amount of interest is treated as paid under this paragraph in a tax year in which, after applying the £30,000 threshold in section 148(1), no amount falls to be charged to tax.

If in any tax year the effect of the £30,000 threshold is that some but not all of the amount otherwise chargeable is charged to tax, the amount of interest treated as paid is limited to the amount charged to tax.

Giving effect to the charge to taxE+W+S+N.I.

14(1)Tax under section 148 is charged on the employee or former employee, whether or not he is the recipient of the payment or other benefit.

(2)After the death of the employee or former employee, any amount chargeable to tax under section 148 shall be assessed and charged upon his personal representatives and is a debt due from and payable out of the estate.

Reporting requirementsE+W+S+N.I.

15Provision may be made by regulations under section 203(2) requiring an employer or former employer to provide such information as may be prescribed by the regulations, within such time as may be so prescribed, as to payments or other benefits provided or to be provided in connection with the termination of a person’s employment or a change in the duties of or emoluments from a person’s employment.

InterpretationE+W+S+N.I.

16In this Schedule—

  • the relevant date” means the date of the termination or change in question; and

  • tax year” means a year of assessment..

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Marginal Citations

Part IIE+W+S+N.I. Consequential amendments

Income and Corporation Taxes Act 1988 (c.1)E+W+S+N.I.

1(1)Section 189 of the Taxes Act 1988 (exemption from Schedule E charge of lump sum payments under approved retirement benefits schemes, etc) is amended as follows.E+W+S+N.I.

(2)Make the existing provision subsection (1).

(3)In paragraph (a) of that subsection for the words from “and is neither" to “section 600" substitute “ and is not excepted from this paragraph by subsection (2) or (3) below ”.

(4)After that subsection insert—

(2)Subsection (1)(a) above does not apply to a payment of compensation for loss of office or employment, or for loss or diminution of emoluments, unless—

(a)the loss or diminution is due to ill-health, or

(b)the payment is properly regarded as earned by past service.

(3)Subsection (1)(a) above does not apply to a payment chargeable to tax under section 600 (payments not authorised by rules of scheme)..

2In section 190 of the Taxes Act 1988 (payments to MPs and others exempt from tax as emoluments), for the words from “but without prejudice" to the end substitute “ but without prejudice to any charge to tax under section 148 ”.E+W+S+N.I.

3In section 202B(8) of the Taxes Act 1988 (receipts basis of assessment), for “143(1)(a) or 148(4)" substitute “ or 143(1)(a) ”.E+W+S+N.I.

4In section 833(3)(a) of the Taxes Act 1988 (calculation of top slice of a person’s income), after “payment" insert “ or other benefit ”.E+W+S+N.I.

Finance Act 1995 (c.4)E+W+S+N.I.

5In section 92 of the Finance Act 1995 (post-employment deductions), for subsection (10) substitute—E+W+S+N.I.

(10)Tax shall not be charged under section 148 of the Taxes Act 1988 (payments and other benefits in connection with termination of employment etc) in respect of a payment or other benefit received by an individual, or an individual’s executors or administrators, in so far as—

(a)in the case of a cash benefit, it is provided for meeting the cost of an amount to which this subsection applies, or

(b)in the case of a non-cash benefit, it is or represents a benefit equivalent to the cost of defraying such an amount.

This subsection applies to an amount which, without being an amount to which this section applies, would fall to be treated as such an amount if subsection (4) of this section were omitted and, where the individual has died, he had not died but had himself defrayed any amounts defrayed by his executors or administrators..

Section 61(2).

SCHEDULE 10E+W+S+N.I. Ordinary commuting and private travel

The Schedule inserted as Schedule 12A to the Taxes Act 1988 is as follows:—

Schedule 12AE+W+S+N.I. Ordinary commuting and private travel

IntroductionE+W+S+N.I.

1(1)The provisions of this Schedule apply for the purposes of section 198(1A)(b)(ii) (qualifying travelling expenses: exclusion of ordinary commuting and private travel).

(2)In this Schedule “employment” includes an office and “employee” includes an office-holder.

Ordinary commuting and private travelE+W+S+N.I.

2(1)Ordinary commuting” means travel between—

(a)the employee’s home, or

(b)a place that is not a workplace in relation to the employment,

and a place which is a permanent workplace in relation to the employment.

(2)Private travel” means travel between—

(a)the employee’s home and a place that is not a workplace in relation to the employment, or

(b)between two places neither of which is a workplace in relation to the employment.

(3)In sub-paragraphs (1)(b) and (2) “workplace” means a place at which the employee’s attendance is necessary in the performance of the duties of the employment.

3Travel between any two places that is for practical purposes substantially ordinary commuting or private travel is treated as ordinary commuting or private travel.

Permanent and temporary workplacesE+W+S+N.I.

4For the purposes of paragraph 2, subject to the following provisions of this Schedule—

  • permanent workplace” means a place which the employee regularly attends in the performance of the duties of the employment and which is not a temporary workplace; and

  • temporary workplace” means a place which the employee attends in the performance of the duties of the employment for the purpose of performing a task of limited duration or for some other temporary purpose.

The 24 month rule and fixed term appointmentsE+W+S+N.I.

5(1)A place is not regarded as a temporary workplace if the employee’s attendance is in the course of a period of continuous work at that place—

(a)lasting more than 24 months, or

(b)comprising all or almost all of the period for which the employee is likely to hold the employment,

or if the employee’s attendance is at a time when it is reasonable to assume that it will be in the course of such a period.

(2)A “period of continuous work" at a place means a period over which, looking at the whole period and considering all the duties of the employment, the duties of the employment fall to be performed to a significant extent at that place.

(3)An actual or contemplated modification of the place at which the duties of the employment fall to be performed is disregarded for the purposes of this paragraph if it does not have, or would not have, any substantial effect on the employee’s journey, or expenses of travelling, to and from the place where the duties fall to be performed.

Depots and basesE+W+S+N.I.

6A place which the employee regularly attends in the performance of the duties of the employment—

(a)which forms the base from which the duties of the employment are performed, or

(b)is the place at which the tasks to be carried out in the performance of those duties are allocated,

is treated as a permanent, and not a temporary, workplace.

Area-based employeesE+W+S+N.I.

7(1)An employee is treated as having a permanent workplace consisting of an area if the following conditions are met.

(2)The conditions are that—

(a)the duties of the employment are defined by reference to an area (whether or not they also require attendance at places outside the area),

(b)in the performance of the duties of the employment the employee attends different places within the area,

(c)none of the places he attends in the performance of the duties of the employment is a permanent workplace, and

(d)applying paragraphs 4 and 5 to the area as if it were a place, the area meets the conditions for being a permanent workplace..

Section 62.

SCHEDULE 11E+W+S+N.I. Transitional provisions for profit-related pay

Application of ScheduleE+W+S+N.I.

1—(1) This Schedule applies for the purposes of Chapter III of Part V of the Taxes Act 1988 (profit-related pay) where—E+W+S+N.I.

(a)profit-related pay is or has been paid to an employee by reference to any period (“the relevant period") and in accordance with a registered scheme (“the affected scheme"), and

(b)sub-paragraph (2) or (3) below applies in the employee’s case to the relevant period.

(2)This sub-paragraph applies in the employee’s case to the relevant period if—

(a)that period is a period beginning for the employee at a time on or after 17th March 1998 and ending before 31st December 2000;

(b)the employee has been eligible in accordance with a related scheme to receive profit-related pay by reference to the whole or a part of any profit period for the related scheme (“the earlier period");

(c)the earlier period is (or, by virtue of sub-paragraph (4) below, is treated as being) a period beginning before the first day of the relevant period; and

(d)the relevant anniversary is (or, by virtue of that sub-paragraph, is treated as being) in a later calendar year than the first day of the relevant period.

(3)This sub-paragraph applies in the employee’s case to the relevant period if—

(a)that period is a period beginning for the employee at a time on or after 17th March 1998 and ending before 31st December 2000;

(b)the employee has been eligible in accordance with either the affected scheme or a related scheme to receive profit-related pay by reference to the whole or any part of a profit period (“the earlier period");

(c)the earlier period is a period beginning twelve months or less before the first day of the relevant period;

(d)the section 171(4) limit for the earlier period is a limit computed in accordance with this Schedule; and

(e)the relevant anniversary is in a later calendar year than the first day of the relevant period.

(4)Where—

(a)the conditions in paragraphs (a) and (b) of sub-paragraph (2) above are satisfied in relation to the relevant period in the case of any employee, and

(b)the person who is the scheme employer in relation to the affected scheme, by notice to the employee, elects that this sub-paragraph shall apply in relation to the related scheme,

the earlier period referred to in that sub-paragraph shall be assumed for the purposes of this Schedule to be a period beginning with the 1st January next before the first day of the relevant period.

Rule for determining section 171(4) limitE+W+S+N.I.

2(1)The section 171(4) limit applicable to any profit-related pay paid to the employee in accordance with the affected scheme and by reference to the relevant period shall be—E+W+S+N.I.

(a)if the relevant period does not begin for the employee before the apportionment date, the limit for the part of the profit period falling on or after that date; and

(b)in any other case the sum of—

(i)the limit for the part of the relevant period falling on or after the apportionment date; and

(ii)the limit for the part of the relevant period falling before that date.

(2)For the purposes of sub-paragraph (1) above the limit for a part of the relevant period shall be computed by—

(a)taking the amount given by virtue of section 61 of the M46Finance Act 1997 (phasing out of relief for profit-related pay) as the section 171(4) limit for a profit period beginning with the first day of that part of that period and ending with the last day of that part of that period;

(b)making a proportionate reduction for so much of that part of that period (if any) as is not included in any period by reference to which the employee is eligible for profit-related pay in accordance with the affected scheme; and

(c)using—

(i)the amount produced by the reduction, or

(ii)(if no reduction has been made) the amount taken in accordance with paragraph (a) above,

as the limit for that part of the relevant period.

(3)Subject to sub-paragraph (4) below, the apportionment date in the case of any employee is for the purposes of this paragraph—

(a)except where the person who is the scheme employer for the affected scheme otherwise elects by notice to that employee, the 1st January that falls next after the first day of the relevant period; and

(b)where that person does so elect, the date which is the relevant anniversary for the purposes of whichever of sub-paragraphs (2) and (3) of paragraph 1 above applies to the relevant period in the employee’s case.

(4)Where—

(a)both sub-paragraphs (2) and (3) of paragraph 1 above apply to the relevant period in the employee’s case, or

(b)there is, for any other reason, more than one date which (but for this sub-paragraph) would be taken in accordance with sub-paragraph (3)(b) above to be the apportionment date,

the apportionment date shall be the earliest of those dates to fall in the calendar year immediately following that in which the first day of the relevant period falls.

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Marginal Citations

Meaning of related schemeE+W+S+N.I.

3(1)In the case of any employee a scheme is, in relation to the affected scheme, a related scheme for the purposes of this Schedule if—E+W+S+N.I.

(a)it was a registered scheme at any relevant time and the conditions set out in sub-paragraph (2) below are satisfied with respect to it; or

(b)notice that for the purposes of this Schedule it is to be treated as a related scheme in relation to the affected scheme is given to the employee by the scheme employer for the affected scheme.

(2)Those conditions are satisfied with respect to a scheme (“the relevant scheme") if a person who is the scheme employer for the affected scheme was, at a relevant time—

(a)the scheme employer for the relevant scheme; or

(b)connected with a person who was, at that or another relevant time, the scheme employer for the relevant scheme.

(3)In this paragraph “relevant time” means any time on the day of the beginning for the employee of the relevant period or in the period of twelve months preceding that day.

(4)Section 839 of the Taxes Act 1988 (connected persons) applies for the purposes of this paragraph.

(5)Without prejudice to sub-paragraph (4) above, for the purposes of this paragraph—

(a)each of the members of a partnership shall be regarded as connected with the partnership and with any person (including another partnership) with whom the partnership is connected; and

(b)a partnership shall be regarded as connected with each of its members and with any person (including another partnership) with whom any of its members is connected.

Meaning of “relevant anniversary"E+W+S+N.I.

4For the purposes of this Schedule the relevant anniversary is—E+W+S+N.I.

(a)for the purposes of paragraph 1(2) above, the first anniversary of the first day of the earlier period; and

(b)for the purposes of paragraph 1(3) above, the first anniversary of the date that is taken to be the relevant anniversary for the purpose of computing the section 171(4) limit for the earlier period in accordance with this Schedule.

General interpretationE+W+S+N.I.

5(1)Expressions used in this Schedule and in Chapter III of Part V of the Taxes Act 1988 have the same meanings in this Schedule as in that Chapter.E+W+S+N.I.

(2)References in this Schedule to the section 171(4) limit are references to the second of the limits mentioned in section 171(2) of the Taxes Act 1988; and this Schedule shall have effect on the basis that that limit is nil for any period (or part of a period) beginning on or after 1st January 2000.

(3)References in this Schedule to the beginning for the employee of any profit period by reference to which he is eligible to receive profit-related pay are references—

(a)where sub-paragraph (4) below applies, to the earliest time in that period which is included in a part of that period by reference to which he is so eligible; and

(b)in any other case, to the beginning of the first day of the period in question.

(4)This sub-paragraph applies where—

(a)the employee is eligible to receive profit-related pay by reference to only a part of the relevant period; and

(b)that part of that period begins after the beginning of that period.

Section 70.

SCHEDULE 12E+W+S+N.I. EIS and VCTs: meaning of qualifying trade

New exclusions for the enterprise investment schemeE+W+S+N.I.

1(1)In subsection (2) of section 297 of the Taxes Act 1988 (activities excluded from qualifying trade), the following paragraphs shall be inserted after paragraph (f)—E+W+S+N.I.

(fa)property development;

(fb)farming or market gardening;

(fc)holding, managing or occupying woodlands, any other forestry activities or timber production;

(fd)operating or managing hotels or comparable establishments or managing property used as an hotel or comparable establishment;

(fe)operating or managing nursing homes or residential care homes, or managing property used as a nursing home or residential care home;.

(2)In paragraph (g) of that subsection (providing support for the carrying on of excluded activities), for “(f)" there shall be substituted “ (fe) ”.

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

(3A)For the purposes of this Chapter the activities of a person shall not be taken to fall within paragraph (fd) or (fe) of subsection (2) above except where that person has an estate or interest in, or is in occupation of, the hotels or comparable establishments or, as the case may be, the nursing homes or residential care homes.

Definition of excluded activities for the enterprise investment schemeE+W+S+N.I.

2(1)In subsection (5) of section 298 of the Taxes Act 1988 (interpretation of section 297), after the definition of “film" there shall be inserted the following definition—E+W+S+N.I.

nursing home” means any establishment which exists wholly or mainly for the provision of nursing care for persons suffering from sickness, injury or infirmity or for women who are pregnant or have given birth to children;.

(2)In that subsection, before the word “and" at the end of the definition of “pleasure craft” there shall be inserted the following definitions—

property development” means the development of land—

(a)by a company which has, or at any time has had, an interest in the land, and

(b)with the sole or main object of realising a gain from the disposal of an interest in the land when it is developed;

residential care home” means any establishment which exists wholly or mainly for the provision of residential accommodation, together with board and personal care, for persons in need of personal care by reason of old age, mental or physical disabilities, past or present dependence on alcohol or drugs or any past illnesses or past or present mental disorders; .

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

(5A)References in this section, in relation to an hotel, to a comparable establishment are references to a guest house, hostel or other establishment the main purpose of maintaining which is the provision of facilities for overnight accommodation (whether with or without catering services).

(5B)Subject to subsection (5C) below, the reference in subsection (5) above to an interest in land is a reference to—

(a)any estate, interest or right in or over land, including any right affecting the use or disposition of land; or

(b)any right to obtain such an estate, interest or right from another which is conditional on the other’s ability to grant the estate, interest or right.

(5C)References in this section to an interest in land do not include references to—

(a)the interest of a creditor (other than a creditor in respect of a rentcharge) whose debt is secured by way of mortgage, an agreement for a mortgage or a charge of any kind over land; or

(b)in the case of land in Scotland, the interest of a creditor in a charge or security of any kind over land.

New exclusions for VCTsE+W+S+N.I.

3(1)In sub-paragraph (2) of paragraph 4 of Schedule 28B to the Taxes Act 1988 (activities excluded from qualifying trade), the following paragraphs shall be inserted after paragraph (e)—E+W+S+N.I.

(ea)property development;

(eb)farming or market gardening;

(ec)holding, managing or occupying woodlands, any other forestry activities or timber production;

(ed)operating or managing hotels or comparable establishments, or managing property used as an hotel or comparable establishment;

(ee)operating or managing nursing homes or residential care homes, or managing property used as a nursing home or residential care home;.

(2)In paragraph (f) of that sub-paragraph (providing support for the carrying on of excluded activities), for “(e)" there shall be substituted “ (ee) ”.

(3)After sub-paragraph (3) of that paragraph there shall be inserted the following sub-paragraph—

(3A)For the purposes of this Schedule the activities of a person shall not be taken to fall within paragraph (ed) or (ee) of sub-paragraph (2) above except where that person has an estate or interest in, or is in occupation of, the hotels or comparable establishments or, as the case may be, the nursing homes or residential care homes.

Definition of excluded activities for VCTsE+W+S+N.I.

4(1)In sub-paragraph (1) of paragraph 5 of that Schedule (interpretation of paragraph 4), after the definition of “film” there shall be inserted the following definition—E+W+S+N.I.

nursing home” means any establishment which exists wholly or mainly for the provision of nursing care for persons suffering from sickness, injury or infirmity or for women who are pregnant or have given birth to children;.

(2)In that sub-paragraph, after the definition of “pleasure craft” there shall be inserted the following definition—

property development” means the development of land—

(a)by a company which has, or at any time has had, an interest in the land, and

(b)with the sole or main object of realising a gain from the disposal of an interest in the land when it is developed;.

(3)In that sub-paragraph, before the word “and” at the end of the definition of “research and development” there shall be inserted the following definition—

residential care home means any establishment which exists wholly or mainly for the provision of residential accommodation, together with board and personal care, for persons in need of personal care by reason of old age, mental or physical disabilities, past or present dependence on alcohol or drugs or any past illnesses or past or present mental disorders;.

(4)In sub-paragraph (5) of that paragraph (definitions for the purposes of that paragraph), after the definition of “director” there shall be inserted the following definition—

interest in land” means (subject to sub-paragraph (6) below)—

(a)any estate, interest or right in or over land, including any right affecting the use or disposition of land; or

(b)any right to obtain such an estate, interest or right from another which is conditional on the other’s ability to grant the estate, interest or right.

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

(6)References in paragraph 4 above, in relation to an hotel, to a comparable establishment are references to a guest house, hostel or other establishment the main purpose of maintaining which is the provision of facilities for overnight accommodation (whether with or without catering services).

(7)References in this paragraph to an interest in land do not include references to—

(a)the interest of a creditor (other than a creditor in respect of a rentcharge) whose debt is secured by way of mortgage, an agreement for a mortgage or a charge of any kind over land; or

(b)in the case of land in Scotland, the interest of a creditor in a charge or security of any kind over land.

CommencementE+W+S+N.I.

5(1)Paragraphs 1 and 2 above have effect in relation to shares issued on or after 17th March 1998.E+W+S+N.I.

(2)Subject to sub-paragraph (3) below, paragraphs 3 and 4 above have effect for the purpose of determining whether any shares or securities are, as at any time on or after 17th March 1998, to be regarded as comprised in the qualifying holdings of any company (“the trust company").

(3)Paragraphs 3 and 4 above shall not have effect for the purpose of making such a determination in relation to any shares or securities acquired by the trust company by means of the investment of—

(a)money raised by the issue before 17th March 1998 of shares in or securities of the trust company, or

(b)money derived from the investment by that company of any such money.

Section 74(1).

SCHEDULE 13E+W+S+N.I. Changes to EIS etc

Part IE+W+S+N.I. EIS income tax relief

Eligibility for reliefE+W+S+N.I.

1(1)In subsection (1) of section 289 of the Taxes Act 1988—E+W+S+N.I.

(a)in paragraph (a), after the words “has subscribed” there shall be inserted the words “ wholly in cash ”;

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

(aa)at the time when they are issued the shares are fully paid up (disregarding for this purpose any undertaking to pay cash to the company at a future date),;

(c)in paragraph (b), after the words “the shares” there shall be inserted the words “ and all other shares comprised in the same issue ”; and

(d)in paragraph (c), for the words “that activity” there shall be substituted the words “ the activity mentioned in paragraph (b) above ”.

(2)In subsection (1A)(c) of that section, for the word “subsidiary” there shall be substituted the words “ 90 per cent. subsidiary ”.

(3)In subsection (6) of that section, after the word “subscribed” there shall be inserted the word “ for ”.

(4)In subsection (7) of that section, the word “preferential”, in the second place where it occurs, shall cease to have effect.

(5)After subsection (8) of that section there shall be inserted the following subsection—

(9)In this section “90 per cent. subsidiary”, in relation to the qualifying company, means a subsidiary of a kind which the company might hold by virtue of section 308 if—

(a)the references in subsection (2) of that section to 75 per cent. were references to 90 per cent.; and

(b)subsection (4) of that section were omitted.

Form of reliefE+W+S+N.I.

2In subsection (4) of section 289A of the Taxes Act 1988, for “£15,000" there shall be substituted “ £25,000 ”.E+W+S+N.I.

Attribution of relief to sharesE+W+S+N.I.

3(1)In subsection (3)(b) of section 289B of the Taxes Act 1988, for the words “bonus shares in that company which are eligible shares" there shall be substituted the words “ corresponding bonus shares in that company ”.E+W+S+N.I.

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

(3A)In subsection (3) above “corresponding bonus shares” means bonus shares which—

(a)are issued in respect of the shares comprised in the original issue; and

(b)are of the same class, and carry the same rights, as those shares.

(3)For subsection (4) of that section there shall be substituted the following subsection—

(4)Subject to subsection (5) below, in this Chapter references (however expressed) to an issue of eligible shares in any company to an individual are references to any eligible shares in the company that are of the same class and are issued to him on the same day.

(4)In subsection (5) of that section, for the words “the following provisions of this Chapter (except section 290(1))" there shall be substituted the words “ sections 299(4) and 306(1) ”.

(5)Sub-paragraphs (1) and (2) above have effect in relation to bonus shares issued on or after 6th April 1998.

Maximum subscriptions etc.E+W+S+N.I.

4In subsection (2) of section 290 of the Taxes Act 1988, for “£100,000" there shall be substituted “ £150,000 ”.E+W+S+N.I.

5Section 290A of the Taxes Act 1988 shall cease to have effect.E+W+S+N.I.

Individuals qualifying for reliefE+W+S+N.I.

6F34(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S+N.I.

(2)In subsection (2) of that section, the words “and sections 291A and 291B" shall cease to have effect.

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

(3)In subsection (2) above “subsidiary”, in relation to the issuing company, means a company which at any time in the relevant period is a 51 per cent subsidiary of the issuing company, whether or not it is such a subsidiary while the individual concerned or his associate is such an employee, partner or director as is mentioned in that subsection.

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

(6)In this Chapter “the seven year period”, in relation to relief in respect of any eligible shares issued by a company, means the period beginning two years before, and ending five years after, the issue of the shares.

Annotations: Help about Annotation
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Amendments (Textual)

F34Sch. 13 para. 6(1) repealed (11.5.2001 with effect in accordance with Sch. 15 para. 40(2) of the amending Act) by 2001 c. 9, ss. 63, 110, Sch. 33 Pt. 2(3) Note 6

Connected persons: directorsE+W+S+N.I.

7F35(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S+N.I.

(2)In subsection (5) of that section—

(a)for sub-paragraph (ii) of paragraph (b) there shall be substituted the following sub-paragraph—

(ii)involved in carrying on (whether on his own account or as a partner, director or employee) the whole or any part of the trade carried on by the issuing company or a subsidiary, and; and

(b)the words “and the reference to a trade previously carried on includes part of such a trade" shall cease to have effect.

Annotations: Help about Annotation
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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F35Sch. 13 para. 7(1) repealed (11.5.2001 with effect in accordance with Sch. 15 para. 40(2) of the amending Act) by 2001 c. 9, ss. 63, 110, Sch. 33 Pt. 2(3) Note 6

Connected persons: persons interested in capital etc.E+W+S+N.I.

8(1)After subsection (5) of section 291B of the Taxes Act 1988 there shall be inserted the following subsection—E+W+S+N.I.

(5A)An individual is not connected with a company by reason only of the fact that one or more shares in the company are held by him, or by an associate of his, at a time when the company—

(a)has not issued any shares other than subscriber shares; and

(b)has not begun to carry on, or to make preparations for carrying on, any trade or business.

(2)For subsection (6) of that section there shall be substituted the following subsection—

(6)In this section “subsidiary”, in relation to the issuing company, means a company which at any time in the relevant period is a 51 per cent. subsidiary of the issuing company, whether or not it is such a subsidiary while the individual concerned has, or is entitled to acquire, such capital, voting power, rights or control as are mentioned in this section.

Qualifying companies and qualifying tradesE+W+S+N.I.

9(1)In subsection (3B)(b) of section 293 of the Taxes Act 1988, after the word “activities" there shall be inserted the words “ (other than research and development and oil exploration) ”.E+W+S+N.I.

(2)In paragraph (a) of subsection (6) of that section, the words “it is shown that" shall cease to have effect.

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

(6A)The value of the relevant assets—

(a)must not exceed £15 million immediately before the issue of the eligible shares; and

(b)must not exceed £16 million immediately afterwards.

(6B)Subject to subsection (6C) below, the reference in subsection (6A) above to the value of the relevant assets is a reference—

(a)in relation to a time when the company did not have any qualifying subsidiaries, to the value of the gross assets of the company at that time; and

(b)in relation to any other time, to the aggregate value at that time of the gross assets of all the companies in the company’s group.

(6C)For the purposes of subsection (6B) above assets of any member of the company’s group that consist in rights against, or in shares in or securities of, another member of the group shall be disregarded.

(6D)In subsections (6B) and (6C) above references, in relation to any time, to the company’s group are references to the company and its qualifying subsidiaries at that time.

(4)Subsection (7) of that section shall cease to have effect.

(5)In subsection (8) of that section, for the words “Subject to section 308" there shall be substituted the words “ Subject to sections 304A and 308 ”.

(6)Sub-paragraph (2) above has effect in relation to events occurring on or after 6th April 1998.

10In subsection (1) of section 297 of the Taxes Act 1988, the words “Subject to section 298(7) below" shall cease to have effect.E+W+S+N.I.

11In subsection (1) of section 298 of the Taxes Act 1988, for the words “sections 293(9) and 297" there shall be substituted the words “ section 297 ”.E+W+S+N.I.

Disposal of sharesE+W+S+N.I.

12(1)In subsection (1) of section 299 of the Taxes Act 1988—E+W+S+N.I.

(a)for the words from the beginning to “relevant period" there shall be substituted the words “ Subject to section 304(1), where an individual makes, before the end of the relevant period, any disposal of eligible shares to which relief is attributable ”; and

(b)in paragraphs (a) and (b)(ii), for the words “any relief" there shall be substituted the words “ the relief ”.

(2)In subsection (3) of that section—

(a)for the words “any issue of shares held by any person" there shall be substituted the words “ any issue of eligible shares held by any individual ”; and

(b)for the words “the shares" there shall be substituted the words “ the issue ”.

(3)In subsection (4) of that section—

(a)after the words “any issue of" there shall be inserted the word “ eligible ”; and

(b)after the word “shares" there shall be inserted the words “ issued in that year (or treated by section 289B(5) as so issued) ”.

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

(5A)The shares to which such an option relates shall be taken to be those which, if—

(a)the option were exercised immediately after the grant, and

(b)any shares in the company acquired by the individual after the grant were disposed of immediately after being acquired,

would be treated for the purposes of this section as disposed of in pursuance of the option.

(5)For subsection (6) of that section there shall be substituted the following subsections—

(6)Where shares of any class in a company have been acquired by an individual on different days, any disposal by him of shares of that class shall be treated for the purposes of this section as relating to those acquired on an earlier day rather than to those acquired on a later day.

(6A)Where shares of any class in a company have been acquired by an individual on the same day, any of those shares disposed of by him shall be treated for the purposes of this section as disposed of in the following order, namely—

(a)first any to which neither relief under this Chapter nor deferral relief is attributable;

(b)next any to which deferral relief, but not relief under this Chapter, is attributable;

(c)next any to which relief under this Chapter, but not deferral relief, is attributable; and

(d)finally any to which both relief under this Chapter and deferral relief are attributable;

and in this subsection and subsection (6C) below “deferral relief” has the same meaning as in Schedule 5B to the 1992 Act.

(6B)Any shares falling within paragraph (c) or (d) of subsection (6A) above which are treated by section 289B(5) as issued on an earlier day shall be treated as disposed of before any other shares falling within that paragraph.

(6C)The following, namely—

(a)any shares to which relief under this Chapter is attributable and which were transferred to an individual as mentioned in section 304, and

(b)any shares to which deferral relief, but not relief under this Chapter, is attributable and which were acquired by an individual on a disposal to which section 58 of the 1992 Act applies,

shall be treated for the purposes of subsections (6) and (6A) above as acquired by him on the day on which they were issued.

(6D)In a case to which section 127 of the 1992 Act applies (whether or not by virtue of section 135(3) of that Act), shares comprised in the new holding shall be treated for the purposes of subsections (6) and (6A) above as acquired when the original shares were acquired.

In this subsection “new holding” and “original shares” shall be construed in accordance with sections 126, 127, 135 and 136 of the 1992 Act.

(6)Subsection (7) of that section shall cease to have effect.

(7)Subsection (8)(a) of that section shall cease to have effect.

(8)Sub-paragraphs (1), (3)(b), (5) and (6) above have effect in relation to disposals made on or after 6th April 1998.

(9)Sub-paragraph (4) above has effect in relation to options granted on or after that date.

Value received from companyE+W+S+N.I.

13(1)For subsection (1) of section 300 of the Taxes Act 1988 there shall be substituted the following subsection—E+W+S+N.I.

(1)Subsection (1A) below applies where an individual who subscribes for eligible shares in a company receives any value from the company at any time in the seven year period.

(2)For subsection (1C) of that section there shall be substituted the following subsection—

(1C)References in subsection (1) above to the receipt of value from a company include references to the receipt of value from a person who at any time in the relevant period is connected with the company, whether or not he is so connected at the time when the individual concerned receives the value from him; and other references to the company in this section and section 301 shall be read accordingly.

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

(6)Where by reason of an individual’s disposal of shares in a company any relief attributable to those shares is withdrawn or reduced under section 299, the individual shall not be treated for the purposes of this section as receiving value from the company in respect of the disposal.

(4)Sub-paragraph (3) above has effect in relation to disposals made on or after 6th April 1998.

14(1)After subsection (4) of section 301 of the Taxes Act 1988 there shall be inserted the following subsection—E+W+S+N.I.

(4A)For the purposes of this section and section 300, an individual who acquires any eligible shares on such a transfer as is mentioned in section 304 shall be treated as if he subscribed for those shares.

(2)In subsection (5) of that section, for the words “the credit" there shall be substituted the words “ any credit ”.

(3)Sub-paragraph (1) above has effect in relation to value received (within the meaning of section 300 of that Act) on or after 6th April 1998.

Value received by persons other than claimantsE+W+S+N.I.

15(1)For subsections (1) to (2) of section 303 of the Taxes Act 1988 there shall be substituted the following subsections—E+W+S+N.I.

(1)Where, in the case of an issue of eligible shares in a company, any relief is attributable to any shares comprised in the issue which are held by an individual, subsection (1A) below shall apply if at any time in the seven year period the company or any subsidiary—

(a)repays, redeems or repurchases any of its share capital which belongs to any member other than that individual or a person who falls within subsection (1B) below, or

(b)makes any payment to any such member for giving up his right to any of the share capital of the company or subsidiary on its cancellation or extinguishment.

(1A)The relief—

(a)if it is greater than the amount mentioned in subsection (1C) below, shall be reduced by that amount, and

(b)if paragraph (a) above does not apply, shall be withdrawn.

(1B)A person falls within this subsection if the repayment, redemption, repurchase or payment in question—

(a)causes any relief attributable to his shares in the company to be withdrawn or reduced by virtue of section 299 or 300(2)(a), or

(b)gives rise to a qualifying chargeable event (within the meaning of paragraph 14(4) of Schedule 5B to the 1992 Act) in respect of him.

(1C)The amount referred to in subsection (1A) above is an amount equal to tax at the lower rate for the year of assessment for which the relief was given—

(a)where subsection (1) above does not apply in the case of any other individual, on the amount receivable by the member;

(b)where that subsection also applies in the case of one or more other individuals, on the appropriate fraction of that amount;

and subsection (4) of section 299 applies for the purposes of this subsection as it applies for the purposes of subsection (2) of that section.

(1D)In subsection (1C) above “the appropriate fraction” is—

where—

  • A is the amount subscribed by the individual for eligible shares which are comprised in the issue and to which relief is or, but for subsection (1A)(b) above, would be attributable;

  • B is the aggregate of that amount and the amount or amounts subscribed by the other individual or individuals for such shares.

(2)Where the repayment, redemption, repurchase or payment mentioned in subsection (1) above falls within the seven year periods for two or more issues of eligible shares in the company, subsection (1A) above shall have effect in relation to each of those issues as if the amount receivable by the member were reduced by multiplying it by the fraction—

where—

  • C is the amount subscribed by individuals for eligible shares which are comprised in the issue and to which relief is or, but for subsection (1A)(b) above, would be attributable;

  • D is the aggregate of that amount and the corresponding amount or amounts for the other issue or issues.

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

(3)For subsection (9A) of that section there shall be substituted the following subsection—

(9A)References in this section to a subsidiary of a company are references to a company which at any time in the relevant period is a 51 per cent. subsidiary of the first mentioned company, whether or not it is such a subsidiary at the time of the repayment, redemption, repurchase or payment in question or, as the case may be, the receipt of value in question.

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F36Sch. 13 para. 15(2) repealed (11.5.2001 with effect in accordance with Sch. 15 para. 40(3) of the amending Act) by 2001 c. 9, ss. 63, 110, Sch. 33 Pt. 2(3) Note 2

Husband and wifeE+W+S+N.I.

16(1)After subsection (3) of section 304 of the Taxes Act 1988 there shall be inserted the following subsection—E+W+S+N.I.

(4)Subsections (6) to (6D) of section 299 shall apply for the purposes of this section as they apply for the purposes of that section.

(2)This paragraph has effect in relation to disposals made on or after 6th April 1998.

Acquisition of share capital by new companyE+W+S+N.I.

17(1)After section 304 of the Taxes Act 1988 there shall be inserted the following section—E+W+S+N.I.

304A Acquisition of share capital by new company.

(1)This section applies where—

(a)a company (“the new company") in which the only issued shares are subscriber shares acquires all the shares (“old shares") in another company (“the old company");

(b)the consideration for the old shares consists wholly of the issue of shares (“new shares") in the new company;

(c)the consideration for new shares of each description consists wholly of old shares of the corresponding description;

(d)new shares of each description are issued to the holders of old shares of the corresponding description in respect of and in proportion to their holdings;

(e)at some time before the issue of the new shares—

(i)the old company issued eligible shares; and

(ii)a certificate in relation to those eligible shares was issued by that company for the purposes of subsection (2) of section 306 and in accordance with that section; and

(f)before the issue of the new shares, the Board have, on the application of the new company or the old company, notified that company that the Board are satisfied that the exchange of shares—

(i)will be effected for bona fide commercial reasons; and

(ii)will not form part of any such scheme or arrangements as are mentioned in section 137(1) of the 1992 Act.

(2)For the purposes of this Chapter—

(a)the exchange of shares shall not be regarded as involving any disposal of the old shares or any acquisition of the new shares; and

(b)any relief under this Chapter which is attributable to any old shares shall be attributable instead to the new shares for which they are exchanged.

(3)Where, in the case of any new shares held by an individual to which relief becomes so attributable, the old shares for which they are exchanged were subscribed for by and issued to the individual, this Chapter shall have effect as if—

(a)the new shares had been subscribed for by him at the time when, and for the amount for which, the old shares were subscribed for by him;

(b)the new shares had been issued to him by the new company at the time when the old shares were issued to him by the old company;

(c)the claim for relief made in respect of the old shares had been made in respect of the new shares; and

(d)his liability to income tax had been reduced under section 289A in respect of the new shares for the same year of assessment as that for which his liability was so reduced in respect of the old shares.

(4)Where, in the case of any new shares held by an individual to which relief becomes so attributable, the old shares for which they are exchanged were transferred to the individual as mentioned in section 304, this Chapter shall have effect in relation to any subsequent disposal or other event as if—

(a)the new shares had been subscribed for by him at the time when, and for the amount for which, the old shares were subscribed for;

(b)the new shares had been issued by the new company at the time when the old shares were issued by the old company;

(c)the claim for relief made in respect of the old shares had been made in respect of the new shares; and

(d)his liability to income tax had been reduced under section 289A in respect of the new shares for the same year of assessment as that for which the liability of the individual who subscribed for the old shares was so reduced in respect of those shares.

(5)Where relief becomes so attributable to any new shares—

(a)this Chapter shall have effect as if anything which, under section 306(2), 307(1A) or 310, has been done, or is required to be done, by or in relation to the old company had been done, or were required to be done, by or in relation to the new company; and

(b)any appeal brought by the old company against a notice under section 307(1A)(b) may be prosecuted by the new company as if it had been brought by that company.

(6)For the purposes of this section old shares and new shares are of a corresponding description if, on the assumption that they were shares in the same company, they would be of the same class and carry the same rights; and in subsection (1) above references to shares, except in the expressions “eligible shares” and “subscriber shares”, include references to securities.

(7)Nothing in section 293(8) shall apply in relation to such an exchange of shares, or shares and securities, as is mentioned in subsection (1) above or arrangements with a view to such an exchange.

(8)Subsection (2) of section 138 of the 1992 Act shall apply for the purposes of subsection (1)(f) above as it applies for the purposes of subsection (1) of that section.

(2)This paragraph has effect in relation to new shares (within the meaning of section 304A of the Taxes Act 1988) issued on or after 6th April 1998.

Relief for loss on disposal of sharesE+W+S+N.I.

18(1)In subsection (2) of section 305A of the Taxes Act 1988, for the words “576(2) and (3)" there shall be substituted the words “ 576(1) to (3) ”.E+W+S+N.I.

(2)This paragraph has effect in relation to disposals made on or after 6th April 1998.

ClaimsE+W+S+N.I.

19(1)In subsection (1) of section 306 of the Taxes Act 1988, after the word “assessment", in the first place where it occurs, there shall be inserted the words “ (or treated by section 289B(5) as so issued) ”.E+W+S+N.I.

(2)In subsection (2) of that section, for the words “the conditions for the relief, so far as applying to the company and the trade," there shall be substituted the words “ , except so far as they fall to be satisfied by that person, the conditions for the relief ”.

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

(3)Before issuing a certificate for the purposes of subsection (2) above a company shall furnish the inspector with a statement to the effect that, except so far as they fall to be satisfied by the persons to whom eligible shares comprised in the share issue have been issued, the conditions for the relief—

(a)are satisfied in relation to that issue; and

(b)have been so satisfied at all times since the beginning of the relevant period.

(4)In subsection (3A) of that section, the words “but section 289B(5) shall not apply for the purposes of this subsection" shall cease to have effect.

(5)For subsections (4) and (5) of that section there shall be substituted the following subsections—

(4)No certificate shall be issued for the purposes of subsection (2) above without the authority of the inspector; but where the company, or a person connected with the company, has given notice to the inspector under section 310(2) or paragraph 16(2) or (4) of Schedule 5B to the 1992 Act, the authority must be given or renewed after the receipt of the notice.

(5)Any statement under subsection (3) above shall be in such form as the Board may direct and shall contain—

(a)such additional information as the Board may reasonably require, including in particular information relating to the persons who have requested the issue of certificates under subsection (2) above;

(b)a declaration that the statement is correct to the best of the company’s knowledge and belief; and

(c)such other declarations as the Board may reasonably require.

Withdrawal of reliefE+W+S+N.I.

20(1)In subsection (1A) of section 307 of the Taxes Act 1988—E+W+S+N.I.

F37(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b)after the words “section 310" there shall be inserted the words “ or paragraph 16(2) or (4) of Schedule 5B to the 1992 Act ”.

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

(1C)Where any issue has been determined on an appeal brought by virtue of paragraph 1A(6) of Schedule 5B to the 1992 Act (appeal against notice that shares never have been, or have ceased to be, eligible shares), the determination shall be conclusive for the purposes of any appeal brought by virtue of subsection (1B) above on which that issue arises.

(3)In subsection (4) of that section, for the words “ordinary shares" there shall be substituted the words “ eligible shares ”.

(4)In subsection (6)(b) of that section, for the words “section 291" there shall be substituted the words “ section 289(1)(ba), 291 ”.

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Amendments (Textual)

F37Sch. 13 para. 20(1)(a) repealed (11.5.2001 with effect as mentioned in Sch. 15 para. 40(2) of the amending act) by 2001 c. 9, ss. 63, 110, Sch. 33 Pt. 2(3) Note 6

Application to subsidiariesE+W+S+N.I.

21In subsection (2) of section 308 of the Taxes Act 1988, for the words “90 per cent.", in each place where they occur, there shall be substituted the words “ 75 per cent. ”.E+W+S+N.I.

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