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Finance Act 2001

Status:

This is the original version (as it was originally enacted).

SCHEDULES

Section 6.

SCHEDULE 1General betting duty

For sections 1 to 5 of the Betting and Gaming Duties Act 1981 (c. 63) (general betting duty: charge, rate and payment) substitute—

General betting duty

1The duty

A duty of excise to be known as general betting duty shall be charged in accordance with sections 2 to 5D.

2Bookmakers: general bets

(1)General betting duty shall be charged on a bet made with a bookmaker who is in the United Kingdom.

(2)Subsection (1) does not apply to—

(a)an on-course bet,

(b)a spread bet,

(c)a bet made by way of pool betting, or

(d)a bet made by way of coupon betting.

(3)The amount of duty charged in respect of bets made with a bookmaker in an accounting period shall be 15 per cent. of the amount of his net stake receipts for that period.

3Bookmakers: spread bets

(1)General betting duty shall be charged on a spread bet made with a bookmaker who—

(a)is in the United Kingdom, and

(b)holds a bookmaker’s permit.

(2)A bet is a spread bet if it constitutes a contract to which section 63 of the Financial Services Act 1986 applies by virtue of paragraphs 9 and 12 of Schedule 1 to that Act (gaming contracts: investments).

(3)The amount of duty charged under subsection (1) in respect of spread bets made with a bookmaker in an accounting period shall be—

(a)3 per cent. of the amount of his net stake receipts in respect of financial spread bets for that period (if any), plus

(b)10 per cent. of the amount of his net stake receipts in respect of other spread bets for that period (if any).

(4)A “financial spread bet” is a spread bet the subject of which is a financial matter.

(5)The Commissioners may by order provide that a specified matter—

(a)shall be treated as a financial matter for the purpose of subsection (4), or

(b)shall not be treated as a financial matter for that purpose.

4Other betting

(1)General betting duty shall be charged on sponsored pool betting.

(2)General betting duty shall be charged on a bet made by means of facilities provided by the Horserace Totalisator Board.

(3)General betting duty shall be charged on a bet made on an event on a track falling within subsection (4) if the bet is made—

(a)by means of a totalisator which operates on that track, and

(b)on the day of the event.

(4)A track falls within this subsection if—

(a)a track betting licence is in force for the track under Schedule 3 to the Betting, Gaming and Lotteries Act 1963,

(b)a track betting licence is in force for the track under Article 37 of the Betting, Gaming, Lotteries and Amusements (Northern Ireland) Order 1985, or

(c)the Commissioners designate the track for the purposes of this subsection.

(5)The amount of duty charged under subsections (1) to (3) in respect of bets made by means of facilities provided by a person in an accounting period shall be 15 per cent. of the amount of his net stake receipts for that period.

(6)Subsections (1) to (3) do not apply to—

(a)on-course bets, or

(b)coupon betting.

5Net stake receipts

(1)For the purposes of a charge under a provision of sections 2 to 4 in respect of the class of bets to which the provision applies, the amount of a person’s net stake receipts for an accounting period is X minus Y, where—

(a)X is the aggregate of amounts which fall due to that person in the accounting period in respect of bets of that class made with him, and

(b)Y is the aggregate of amounts paid by the person in that period by way of winnings to persons who made bets of that class with him (irrespective of when the bets were made or determined).

(2)Where—

(a)a person makes a bet other than a spread bet, and

(b)the sum which he will lose if unsuccessful is known when the bet is made,

that sum shall be treated for the purposes of subsection (1)(a) as falling due when the bet is made (irrespective of when it is actually paid or required to be paid).

(3)Where the amount of a person’s net stake receipts is zero or a negative amount, it shall be disregarded for the purposes of sections 2 to 4.

(4)In calculating an amount due to a person in respect of a bet, no deduction shall be made in respect of—

(a)any other benefit secured by the person who makes the bet as a result of paying the money,

(b)a person’s expenses, whether in paying duty or otherwise, or

(c)any other matter.

(5)Where a person makes a bet in pursuance of an offer which permits him to pay nothing or less than the amount which he would have been required to pay without the offer, he shall be treated for the purposes of this section as being due to pay that amount—

(a)to the person with whom the bet is made, and

(b)at the time when the bet is made.

(6)For the purpose of subsection (1)(b)—

(a)the reference to paying an amount to a person includes a reference to holding it in an account if the person is notified that the amount is being held for him in the account and that he is entitled to withdraw it on demand,

(b)the return of a stake shall be treated as a payment by way of winnings, and

(c)only payments of money shall be taken into account.

(7)In the application of this section to a charge under section 4(1) to (3), a reference to bets made with a person shall be treated as a reference to bets made by means of facilities provided by him.

5AMultiple bets

(1)Subject to subsection (3), this section applies where—

(a)a person bets on more than one contingency, and

(b)he bets on terms that if his bet in respect of one contingency is successful the stake or winnings will be carried forward as the stake in respect of another contingency.

(2)Where this section applies—

(a)the person mentioned in subsection (1)(a) shall be treated for the purposes of sections 2 to 4 as making a separate bet on each contingency, and

(b)each bet which depends on the result of an earlier bet shall be treated as being made at the time of that result.

(3)This section does not apply where a person bets on more than one contingency if—

(a)the betting takes the form of a single bet or of bets placed at a single time, and

(b)the terms mentioned in subsection (1) do not permit the arrangement for carrying forward to be varied or terminated.

(4)In subsection (1)(b) the reference to “the stake or winnings” includes a reference to—

(a)any part of the stake,

(b)any part of the winnings, and

(c)any combination of stake and winnings.

5BLiability to pay

(1)At the end of each accounting period all general betting duty chargeable in respect of bets made in the period shall become due.

(2)In the case of bets made with a bookmaker in an accounting period the general betting duty shall be paid—

(a)when it becomes due, and

(b)by the bookmaker.

(3)But general betting duty which is due to be paid by a bookmaker in respect of bets may be recovered from the following persons as if they and the bookmaker were jointly and severally liable to pay the duty—

(a)the holder of a bookmaker’s permit for the business in the course of which the bets were made;

(b)a person responsible for the management of that business;

(c)where the bookmaker is a company, a director.

(4)In the case of bets made in an accounting period by means of facilities provided by a person as described in section 4(1) to (3) the general betting duty shall be paid—

(a)when it becomes due, and

(b)by the person who provides the facilities.

(5)This section is without prejudice to paragraph 2 of Schedule 1 to this Act or regulations made under it.

5CBet-brokers

(1)This section applies where—

(a)one person (the “bettor”) makes a bet with another person (the “bet-taker”) using facilities provided in the course of a business by a third person (the “bet-broker”), or

(b)one person (the “bet-broker”) in the course of a business makes a bet with another person (the “bet-taker”) as the agent of a third person (the “bettor”) (whether the bettor is a disclosed principal or an undisclosed principal).

(2)For the purposes of sections 2 to 5B—

(a)the bet shall be treated as if it were made by the bettor with the bet-broker and not with the bet-taker,

(b)the bet-broker shall be treated as a bookmaker in respect of the bet,

(c)the aggregate of amounts due to be paid by the bettor in respect of the bet shall be treated as being due to the bet-broker, and

(d)a sum paid by the bet-taker by way of winnings in respect of the bet shall be treated as having been paid by the bet-broker at that time and for that purpose.

(3)But subsection (2) does not apply to a bet if—

(a)the bet-taker holds a bookmaker’s permit, and

(b)the bet would not be an on-course bet if the bet-broker were making the bet with the bet-taker as principal.

(4)In the case of a bet which is excluded from subsection (2) by virtue of subsection (3), for the purposes of sections 2 to 5B—

(a)the bet shall be treated as if it were made separately by the bettor with the bet-broker and by the bet-broker with the bet-taker,

(b)the bet-broker shall be treated as a bookmaker in respect of the bet,

(c)the aggregate of amounts due to be paid by the bettor in respect of the bet shall be treated as being due separately to the bet-broker and to the bet-taker (and any amount due to be paid by the bet-broker to the bet-taker shall be disregarded), and

(d)a sum paid by the bet-taker by way of winnings in respect of the bet shall be treated as having been paid separately by the bet-taker and by the bet-broker at that time and for that purpose (and any sum paid by the bet-broker shall be disregarded).

(5)This section does not apply—

(a)to bets made by way of pool betting, or

(b)to bets made using facilities provided by a person holding (and relying on) a betting agency permit (within the meaning of section 9(2)(c)(ii) of the Betting, Gaming and Lotteries Act 1963).

(6)Where there is any doubt as to which of two persons is the bettor and which the bet-taker for the purposes of subsection (1)(a), whichever of the two was the first to use the facilities of the bet-broker to offer the bet shall be treated as the bet-taker.

5DAccounting period

(1)For the purposes of sections 2 to 5C—

(a)each calendar month is an accounting period, but

(b)the Commissioners may provide in regulations under paragraph 2 of Schedule 1 to this Act for some other specified period to be an accounting period.

(2)Regulations made by virtue of subsection (1)(b) may—

(a)make provision which applies generally or only in relation to a specified person or class of person;

(b)make different provision for different purposes;

(c)make transitional provision..

1In section 6(1) of the Betting and Gaming Duties Act 1981 (c. 63) (pool betting duty) for “section 1(1)(c) above” substitute “section 4(3)”.

2For section 9(3)(a) of that Act (protection of revenue) substitute—

(a)to any bet which is made by way of pool betting or coupon betting if—

(i)the bet is not made by means of a totalisator,

(ii)the promoter is in the Isle of Man,

(iii)the bet is chargeable with a duty imposed by or under an Act of Tynwald which corresponds to pool betting duty, and

(iv)the duty mentioned in sub-paragraph (iii) is chargeable on the bet at a rate not less than the appropriate rate of pool betting duty; or

(aa)to any bet which is made with a bookmaker if—

(i)it is not made by way of pool betting or coupon betting,

(ii)the bookmaker is in the Isle of Man,

(iii)a duty is imposed by or under an Act of Tynwald in respect of bookmaker’s receipts from bets of that kind, and

(iv)the rates and method of calculation of that duty result in no less duty being charged in respect of bets of that kind than is charged by way of general betting duty in respect of bets of that kind; or.

3Paragraph 2(4)(b) and (c) of Schedule 1 to that Act (general betting duty: administration: records) shall cease to have effect.

Section 9.

SCHEDULE 2Rates of vehicle excise duty on goods vehicles

1Part 8 of Schedule 1 to the Vehicle Excise and Registration Act 1994 (c. 22) (annual rates of vehicle excise duty: goods vehicles) is amended as follows.

2For the Table in paragraph 9(1) (rigid goods vehicles not satisfying reduced pollution requirements and with a revenue weight exceeding 3,500 kilograms but not exceeding 44,000 kilograms) substitute—

Revenue weight of vehicleRate
(1)(2)(3)(4)(5)
ExceedingNot ExceedingTwo axle vehicleThree axle vehicleFour or more axle vehicle
kgskgs£££
3,5007,500165165165
7,50012,000200200200
12,00013,000200200200
13,00014,000200200200
14,00015,000200200200
15,00017,000650200200
17,00019,000650200200
19,00021,000650200200
21,00023,000650450200
23,00025,000650650450
25,00027,000650650650
27,00029,0006506501,200
29,00031,0006506501,200
31,00044,0006506501,200

3In paragraph 9(3) (rigid goods vehicles not satisfying reduced pollution requirements and with a revenue weight exceeding 44,000 kilograms), for “£5,170” substitute “£2,585”.

4In paragraph 9A(3) (rigid goods vehicles satisfying reduced pollution requirements and with a revenue weight exceeding 44,000 kilograms), for “£4,170” substitute “£2,085”.

5For the Table in paragraph 9B (rigid goods vehicles satisfying reduced pollution requirements and with a revenue weight exceeding 3,500 kilograms but not exceeding 44,000 kilograms) substitute—

Revenue weight of vehicleRate
(1)(2)(3)(4)(5)
ExceedingNot ExceedingTwo axle vehicleThree axle vehicleFour or more axle vehicle
kgskgs£££
3,5007,500160160160
7,50012,000160160160
12,00013,000160160160
13,00014,000160160160
14,00015,000160160160
15,00017,000280160160
17,00019,000280160160
19,00021,000280160160
21,00023,000280210160
23,00025,000280280210
25,00027,000280280280
27,00029,000280280700
29,00031,000280280700
31,00044,000280280700

6In paragraph 10(3) (trailer supplement for trailers exceeding 12,000 kilograms is 275 per cent of general rate), for “275” substitute “140”.

7For the Table in paragraph 11(1) (tractive units not satisfying reduced pollution requirements and with a revenue weight exceeding 3,500 kilograms but not exceeding 44,000 kilograms) substitute—

Revenue weight of tractive unitRate for tractive unit with two axlesRate for 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££££££
3,5007,500165165165165165165
7,50012,000165165165165165165
12,00016,000165165165165165165
16,00020,000165165165165165165
20,00023,000165165165165165165
23,00025,000165165165165165165
25,00026,000450165165165165165
26,00028,000450165165165165165
28,00031,000650650165450165165
31,00033,0001,2001,2004501,200450165
33,00034,0001,2001,2004501,200650165
34,00035,0001,5001,5001,2001,200650450
35,00036,0001,5001,5001,2001,200650450
36,00038,0001,5001,5001,2001,5001,200650
38,00041,0001,8501,8501,8501,8501,8501,200
41,00044,0001,8501,8501,8501,8501,8501,200

8In paragraph 11(3) (tractive units not satisfying reduced pollution requirements and with a revenue weight exceeding 44,000 kilograms), for “£5,170” substitute “£2,585”.

9In paragraph 11A(3) (tractive units satisfying reduced pollution requirements and with a revenue weight exceeding 44,000 kilograms), for “£4,170” substitute “£2,085”.

10For the Table in paragraph 11B (tractive units satisfying reduced pollution requirements and with a revenue weight exceeding 3,500 kilograms but not exceeding 44,000 kilograms) substitute—

Revenue weight of tractive unitRate for tractive unit with two axlesRate for 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££££££
3,5007,500160160160160160160
7,50012,000160160160160160160
12,00016,000160160160160160160
16,00020,000160160160160160160
20,00023,000160160160160160160
23,00025,000160160160160160160
25,00026,000210160160160160160
26,00028,000210160160160160160
28,00031,000280280160210160160
31,00033,000700700210700210160
33,00034,000700700210700280160
34,00035,0001,0001,000700700280210
35,00036,0001,0001,000700700280210
36,00038,0001,0001,0007001,000700280
38,00041,0001,3501,3501,3501,3501,350700
41,00044,0001,3501,3501,3501,3501,350700

11In paragraph 11C(2)(a) (certain tractive units not satisfying reduced pollution requirements and with a revenue weight exceeding 41,000 kilograms but not exceeding 44,000 kilograms), for “£1,280” substitute “£650”.

Section 15.

SCHEDULE 3Excise duty: payments by Commissioners in case of error or delay

Part 1Payments

Duty paid in error

1(1)This paragraph applies if—

(a)the first condition set out below is satisfied, and

(b)either the second or the third condition set out below is satisfied.

(2)The first condition is that, due to an error on the part of the Commissioners, any of the following occurs at any time—

(a)a person is refused authorisation for the purposes of section 8(1) or 10(1) of the Alcoholic Liquor Duties Act 1979 (c. 4);

(b)a person is refused a direction for the purposes of section 11(1) of that Act;

(c)a person is refused approval for the purposes of section 9(1) or 14(1) of the Hydrocarbon Oil Duties Act 1979 (c. 5);

(d)a person is refused consent for the purposes of section 10(1) of that Act.

(3)The second condition is that on or after the commencement day a person pays to the Commissioners an amount by way of excise duty which would not have been paid but for the error.

(4)The third condition is that on or after the commencement day the person refused pays for goods an amount which includes an amount which—

(a)represents a payment by way of excise duty, and

(b)would not have been included but for the error.

(5)If the second condition is satisfied the Commissioners may pay to the person refused an amount equal to the duty which would not have been paid.

(6)If the third condition is satisfied the Commissioners may pay to the person refused an amount which appears to them to be equal to the payment by way of excise duty.

(7)The person refused is the person refused an authorisation, direction, approval or consent.

Error relating to rebate

2(1)This paragraph applies if the following two conditions are satisfied.

(2)The first condition is that a person is entitled to use rebated heavy oil in particular circumstances.

(3)The second condition is that—

(a)due to an error on the part of the Commissioners he is unable to use rebated heavy oil in those circumstances,

(b)he uses unrebated heavy oil instead in those circumstances, and

(c)the use occurs on or after the commencement day.

(4)The Commissioners may pay to the person an amount equal to the rebate which would have been allowable under section 11 of the Hydrocarbon Oil Duties Act 1979 (c. 5) if—

(a)the heavy oil used by him in those circumstances had (at the time of that use) been delivered for home use, and

(b)the other conditions for allowing rebate had been satisfied at that time.

(5)Rebated heavy oil is heavy oil on whose delivery for home use a rebate has been allowed under section 11 of the Hydrocarbon Oil Duties Act 1979, and unrebated heavy oil is other heavy oil.

Claims

3No payment may be made to a person under this Part of this Schedule unless—

(a)he makes a claim in such form and manner, and containing such matters, as the Commissioners may prescribe by regulations, and

(b)he satisfies such other conditions as the Commissioners may impose by regulations.

Part 2Interest

Commissioners' delay

4(1)This paragraph applies if—

(a)a person is entitled to obtain an amount by way of repayment or drawback in respect of excise duty paid to the Commissioners,

(b)on or after the commencement day he makes a claim for the repayment or drawback, and

(c)the Commissioners fail to authorise it within the allowable period.

(2)The Commissioners must pay interest to the person on the amount for the applicable period.

(3)The allowable period is the period of 30 days starting with the day on which the Commissioners receive the claim.

(4)The applicable period is the period which—

(a)starts with the day after the allowable period ends, and

(b)ends with the day when the Commissioners authorise the repayment or drawback.

(5)Sub-paragraph (4) is subject to paragraph 6.

5(1)This paragraph applies if—

(a)a person is entitled to obtain an amount by way of repayment or drawback in respect of excise duty paid to the Commissioners,

(b)on or after the commencement day he makes a claim for the repayment or drawback,

(c)the Commissioners set off the amount against an assessment,

(d)the assessment is withdrawn, and

(e)the Commissioners authorise the repayment or drawback.

(2)The Commissioners must pay interest to the person on the amount for the applicable period.

(3)The applicable period is the period which—

(a)starts with the earlier of the days referred to in sub-paragraph (4), and

(b)ends with the day when the Commissioners authorise the repayment or drawback.

(4)The days are—

(a)the day the amount is set off;

(b)the day after the end of the period of 30 days starting with the day on which the Commissioners receive the claim.

(5)Sub-paragraphs (3) and (4) are subject to paragraph 6.

6(1)In deciding the applicable period for the purposes of paragraphs 4 and 5 any period by which the Commissioners' authorisation of the repayment or drawback is delayed by circumstances beyond their control must be ignored.

(2)In applying sub-paragraph (1) account must be taken in particular of any period referable to—

(a)any failure by any person to provide the Commissioners with information requested by them to enable the existence and amount of the claimant’s entitlement to a repayment or drawback to be determined;

(b)the making (in connection with the claim for repayment or drawback) of a claim to anything to which the claimant is not entitled.

(3)In deciding for the purposes of sub-paragraph (2)(a) whether a period of delay is referable to a failure by a person to provide information requested, the period mentioned in sub-paragraph (4) must be taken to be so referable (except so far as may be prescribed by the Commissioners by regulations).

(4)The period is that which—

(a)starts with the day when the Commissioners request the person to provide information they reasonably consider relevant to the matter to be determined, and

(b)ends with the earliest day when it would be reasonable for them to conclude that they have received a complete answer to their request or all they need to answer it, or to conclude that it is unnecessary for them to be provided with information in answer to their request.

Commissioners' error

7(1)This paragraph applies if—

(a)due to an error on the part of the Commissioners a person pays to them an amount by way of excise duty,

(b)the person is entitled to obtain repayment of the amount,

(c)he makes a claim (at any time) for the repayment and the Commissioners authorise it on or after the commencement day, and

(d)he makes a claim for interest under this paragraph before the end of the period of three years starting with the day when the Commissioners authorise the repayment.

(2)The Commissioners must pay interest to the person on the amount concerned for the applicable period.

(3)The applicable period is the period which—

(a)starts with the day when the payment is received by the Commissioners, and

(b)ends with the day when they authorise repayment.

(4)Sub-paragraph (3) is subject to paragraph 11.

8(1)This paragraph applies if—

(a)a person pays to the Commissioners an amount by way of excise duty,

(b)he is entitled to obtain an amount by way of repayment, remission, rebate or drawback in respect of the duty,

(c)due to an error on the part of the Commissioners he fails to claim the amount when he would (apart from the error) have done so,

(d)the person makes a claim (at any time) for the repayment, remission, rebate or drawback and the Commissioners authorise it on or after the commencement day, and

(e)he makes a claim for interest under this paragraph before the end of the period of three years starting with the day when the Commissioners authorise the repayment, remission, rebate or drawback.

(2)The Commissioners must pay interest to the person on the amount concerned for the applicable period.

(3)The applicable period is the period which—

(a)starts with the day when (apart from the error) the Commissioners might reasonably have been expected to authorise repayment, remission, rebate or drawback, and

(b)ends with the day when they authorise it.

(4)Sub-paragraph (3) is subject to paragraph 11.

9(1)This paragraph applies if—

(a)a person pays to the Commissioners an amount by way of excise duty,

(b)he is entitled to obtain an amount by way of repayment, remission, rebate or drawback in respect of the duty,

(c)he makes a claim (at any time) for the repayment, remission, rebate or drawback and the Commissioners authorise it,

(d)due to an error on the part of the Commissioners their authorisation is delayed,

(e)the Commissioners authorise the repayment, remission, rebate or drawback on or after the commencement day,

(f)neither paragraph 4 nor paragraph 5 applies in relation to the person, and

(g)the person makes a claim for interest under this paragraph before the end of the period of three years starting with the day when the Commissioners authorise the repayment, remission, rebate or drawback.

(2)The Commissioners must pay interest to the person on the amount concerned for the applicable period.

(3)The applicable period is the period which—

(a)starts with the day when (apart from the error) the Commissioners might reasonably have been expected to authorise repayment, remission, rebate or drawback, and

(b)ends with the day when they authorise it.

(4)Sub-paragraph (3) is subject to paragraph 11.

10(1)This paragraph applies if—

(a)a person makes a claim for a payment under paragraph 1 or 2 of this Schedule and the Commissioners authorise it, and

(b)he makes a claim for interest under this paragraph before the end of the period of three years starting with the day when the Commissioners authorise the payment.

(2)The Commissioners must pay interest to the person on the amount concerned for the applicable period.

(3)The applicable period is the period which—

(a)starts with the day when the second or third condition in paragraph 1 or the second condition in paragraph 2 (as the case may be) is satisfied in relation to that person, and

(b)ends with the day when the Commissioners authorise the payment under that paragraph.

(4)Sub-paragraph (3) is subject to paragraph 11.

11(1)In deciding the applicable period for the purposes of paragraphs 7 to 10 any period by which the Commissioners' authorisation of the repayment, remission, rebate, drawback or payment is delayed by circumstances beyond their control must be ignored.

(2)In applying sub-paragraph (1) account must be taken in particular of any period referable to—

(a)any unreasonable delay in claiming repayment, remission, rebate, drawback or payment;

(b)any failure by any person to provide the Commissioners with information requested by them to enable the existence and amount of a claimant’s entitlement to repayment, remission, rebate, drawback, payment or interest to be determined;

(c)the making (in connection with the claim for repayment, remission, rebate, drawback or payment) of a claim to anything to which the claimant is not entitled.

(3)In deciding for the purposes of sub-paragraph (2)(b) whether a period of delay is referable to a failure by a person to provide information requested, the period mentioned in sub-paragraph (4) must be taken to be so referable (except so far as may be prescribed by the Commissioners by regulations).

(4)The period is that which—

(a)starts with the day when the Commissioners request the person to provide information they reasonably consider relevant to the matter to be determined, and

(b)ends with the earliest day when it would be reasonable for them to conclude that they have received a complete answer to their request or all they need to answer it, or to conclude that it is unnecessary for them to be provided with information in answer to their request.

Claims

12(1)A claim for interest under a relevant paragraph must be made in such form and manner, and contain such matters, as the Commissioners may prescribe by regulations.

(2)If a person makes a claim under a relevant paragraph for interest on an amount, he may not make a claim under another relevant paragraph for interest on that amount.

(3)The relevant paragraphs are paragraphs 7 to 10.

Rate of interest

13In the case of interest under this Part of this Schedule, the rate is that applicable under section 197 of the Finance Act 1996 (c. 8) (rates of interest).

Part 3Appeals

14(1)This paragraph applies if—

(a)a person (the appellant) appeals to a tribunal under section 16 of the Finance Act 1994 (c. 9) in relation to an assessment to excise duty,

(b)the appellant pays, or gives cash security for, the whole or any part of that duty, and

(c)the tribunal finds that the whole or any part of the amount paid or secured is not due.

(2)The Commissioners must repay to the appellant an amount equal to—

(a)so much of the duty paid as is found not to be due, or

(b)so much of the cash security as relates to the duty found not to be due.

(3)The Commissioners must pay interest to the appellant on the amount referred to in sub-paragraph (2) for the period which—

(a)starts with the day when the duty is paid or the cash security is given, and

(b)ends with the day when the Commissioners authorise the repayment.

(4)The rate of interest is—

(a)such rate as the tribunal determines, or

(b)if it does not determine a rate, the rate applicable under section 197 of the Finance Act 1996.

(5)In this paragraph “cash security” means such adequate security as enables the Commissioners to place the amount in question on deposit.

Part 4General

Amendments

15In section 137A of the Customs and Excise Management Act 1979 (c. 2) (recovery of overpaid excise duty) insert after subsection (5)—

(6)This section does not apply in a case where the Commissioners are—

(a)entitled to pay an amount under Part 1 of Schedule 3 to the Finance Act 2001, or

(b)required to repay an amount under Part 3 of that Schedule..

16In section 16(9) of the Finance Act 1994 (c. 9) (matters which are not ancillary matters) for the words from “paragraph 9(e)” to the end substitute— the following paragraphs of Schedule 5—

(a)paragraph 3(4);

(b)paragraph 4(3);

(c)paragraph 9(e);

(d)paragraph 9A..

17(1)Schedule 5 to the Finance Act 1994 (decisions subject to review and appeal) is amended as follows.

(2)In paragraph 3 (decisions about alcoholic liquor) insert after sub-paragraph (3)—

(4)Any decision which—

(a)is made under paragraph 1 of Schedule 3 to the Finance Act 2001, and

(b)relates to the Alcoholic Liquor Duties Act 1979..

(3)In paragraph 4 (decisions about hydrocarbon oil) insert after sub-paragraph (2)—

(3)Any decision which—

(a)is made under paragraph 1 or 2 of Schedule 3 to the Finance Act 2001, and

(b)relates to the Hydrocarbon Oil Duties Act 1979..

(4)After paragraph 9 insert—

The Finance Act 2001

9AAny decision under or for the purposes of Part 2 of Schedule 3 to the Finance Act 2001 (interest)..

18(1)Section 197(2) of the Finance Act 1996 (c. 8) (setting rates of interest) is amended as follows.

(2)For paragraph (a) substitute—

(a)paragraph 7 of Schedule 6 to the Finance Act 1994 (interest payable to the Commissioners of Customs and Excise in connection with air passenger duty);.

(3)After paragraph (h) (which is inserted by section 49(2) of this Act) insert—

(i)Parts 2 and 3 of Schedule 3 to the Finance Act 2001 (interest payable on repayments etc.)..

19(1)Schedule 5 to the Finance Act 1997 (c. 16) (recovery of excess payments) is amended as follows.

(2)In paragraph 14 (assessment for excessive repayment) at the end of sub-paragraph (3)(b) omit “or” and after sub-paragraph (3)(c) insert— or

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

(3)In paragraph 15 (assessment for overpayments of interest) omit sub-paragraph (2)(a), at the end of sub-paragraph (2)(b) omit “or”, and after sub-paragraph (2)(c) insert— or

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

(4)In paragraph 19 (review of decisions and appeals) in sub-paragraph (1)(c) for “the relevant interest provision is paragraph 9 of Schedule 6 to the Finance Act 1994” substitute “Part 1 of Schedule 3 to the Finance Act 2001 or the relevant interest provision is Part 2 of that Schedule”.

(5)In paragraph 20 (interpretation of Part 5) in sub-paragraph (2)(a)(ii) for “paragraph 9 of Schedule 6 to the Finance Act 1994” substitute “Part 2 of Schedule 3 to the Finance Act 2001”.

20In Schedule 6 to the Finance Act 1994 (c. 9), paragraphs 9 and 10 (interest in relation to air passenger duty) are omitted.

General

21(1)This Schedule shall come into force in accordance with provision made by the Commissioners by order.

(2)A reference in a provision of this Schedule to the commencement day is to such day as the Commissioners appoint by such order for the purposes of that provision.

22(1)A power to make an order or regulations under this Schedule is exercisable by statutory instrument.

(2)An order or regulations under this Schedule—

(a)may make different provision for different purposes;

(b)may make incidental, supplemental, saving or transitional provision.

(3)Regulations under this Schedule are subject to annulment in pursuance of a resolution of either House of Parliament.

23References in this Schedule to the Commissioners are to the Commissioners of Customs and Excise.

Section 24.

SCHEDULE 4Aggregates levy: registration

Notification of registrability etc.

1(1)An unregistered person who—

(a)has formed the intention of carrying out taxable activities,

(b)is required to be registered for the purposes of aggregates levy, or

(c)would be so required but for an exemption by virtue of regulations under section 24(4) of this Act,

shall notify the Commissioners of that fact.

(2)Subject to sub-paragraphs (5) and (6) below, a person who fails to comply with sub-paragraph (1) above shall be liable to a penalty.

(3)The amount of the penalty shall be—

(a)the amount equal to 5 per cent. of the relevant levy; or

(b)if it is greater or the circumstances are such that there is no relevant levy, £250.

(4)In sub-paragraph (3) above “relevant levy” means the aggregates levy (if any) to which the person in question is liable in respect of aggregate subjected to commercial exploitation in the period which—

(a)begins with the date with effect from which he is required to be registered for the purposes of that levy or, as the case may be, would be so required but for an exemption by virtue of regulations under section 24(4) of this Act; and

(b)ends with the date on which the Commissioners received notification of, or otherwise first became aware of, the fact that that person was required to be registered or is a person who would be so required but for such an exemption.

(5)A failure to comply with sub-paragraph (1) above shall not give rise to any liability to a penalty under this paragraph if the person concerned satisfies the Commissioners or, on appeal, an appeal tribunal that there is a reasonable excuse for the failure.

(6)Where, by reason of any conduct falling within sub-paragraph (2) above—

(a)a person is convicted of an offence (whether under this Act or otherwise), or

(b)a person is assessed to a penalty under paragraph 7 of Schedule 6 to this Act (penalty for evasion),

that person shall not by reason of that conduct be liable also to a penalty under this paragraph.

Form of registration

2(1)The Commissioners shall register a person who is required to be registered for the purposes of aggregates levy with effect from the time when the requirement arose.

(2)Where any two or more bodies corporate are members of the same group they shall be registered together as one person in the name of the representative member.

(3)The registration of a body corporate carrying on a business in several divisions may, if the body corporate so requests and the Commissioners see fit, be in the names of those divisions.

(4)The registration of—

(a)any two or more persons carrying on a business in partnership, or

(b)an unincorporated body,

may be in the name of the firm or body concerned.

Notification of loss or prospective loss of registrability

3(1)A person who, having become liable to give a notification by virtue of paragraph 1 above, ceases (whether before or after being registered) to have the intention of carrying out taxable activities shall notify the Commissioners of that fact.

(2)A person who fails to comply with sub-paragraph (1) above shall be liable to a penalty of £250.

Cancellation of registration

4(1)If the Commissioners are satisfied that a registered person—

(a)has ceased to carry out taxable activities, and

(b)does not have the intention of carrying out taxable activities,

they may cancel his registration with effect from such time after he last carried out such activities as appears to them to be appropriate.

(2)Sub-paragraph (1) above applies whether or not the registered person has notified the Commissioners under paragraph 3 above.

(3)Where a registered person is exempted from the requirement to be registered by virtue of regulations under section 24(4), the Commissioners may cancel his registration with effect from the time when he became so exempted or such later time as appears to them to be appropriate.

(4)The Commissioners shall be under a duty to exercise the power conferred by sub-paragraph (1) or (3) above with effect from any time if, where the power is exercisable, they are satisfied that the conditions specified in sub-paragraph (5) below are satisfied and were or will be satisfied at that time.

(5)Those conditions are—

(a)that the person in question—

(i)has given a notification under paragraph 3 above; or

(ii)is exempted from the requirement to be registered by virtue of regulations under section 24(4) of this Act;

(b)that no aggregates levy due from that person, and no amount recoverable as if it were such levy, remains unpaid;

(c)that no tax credit to which that person is entitled by virtue of any tax credit regulations is outstanding; and

(d)that that person is not subject to any outstanding liability to make a return for the purposes of aggregates levy.

(6)Where—

(a)a registered person notifies the Commissioners under paragraph 3 above, and

(b)they are satisfied that (if he had not been registered) he would not have been required to be registered at any time since the time when he was registered,

they shall cancel his registration with effect from the date of his registration.

(7)Where—

(a)a registered person is exempted from the requirement to be registered by virtue of regulations under section 24(4) of this Act, and

(b)the Commissioners are satisfied that he has been so exempted at all times since being registered,

they shall cancel his registration with effect from the date of his registration.

Correction of the register etc.

5(1)The Commissioners may by regulations make provision for and with respect to the correction of entries in the register.

(2)Regulations under this paragraph may, to such extent as appears to the Commissioners appropriate for keeping the register up to date, make provision requiring—

(a)registered persons, and

(b)persons who are required to be registered, and

(c)persons who would be so required but for any exemption by virtue of regulations under section 24(4) of this Act,

to notify the Commissioners of changes in circumstances relating to themselves, their businesses or any other matter with respect to which particulars are contained in the register (or would be, were the person registered).

Supplemental regulations about notifications

6(1)For the purposes of any provision made by or under section 24 of this Act or this Schedule for any matter to be notified to the Commissioners, regulations made by the Commissioners may make provision—

(a)as to the time within which the notification is to be given;

(b)as to the form and manner in which the notification is to be given; and

(c)as to the information and other particulars to be contained in or provided with any notification.

(2)For those purposes the Commissioners may also by regulations impose obligations requiring a person who has given a notification to notify the Commissioners if any information contained in or provided in connection with that notification is or becomes inaccurate.

(3)The power under this paragraph to make regulations as to the time within which any notification is to be given shall include power to authorise the Commissioners to extend the time for the giving of a notification.

Publication of information on the register

7(1)The Commissioners may publish, by such means as they think fit, any information which—

(a)is derived from the register; and

(b)falls within any of the descriptions set out below.

(2)The descriptions are—

(a)the names of registered persons;

(b)particulars of registered sites;

(c)the fact (where it is the case) that the registered person is a body corporate which is a member of a group;

(d)the names of the other bodies corporate which are members of the group.

(3)Information may be published in accordance with this paragraph notwithstanding any obligation not to disclose the information that would otherwise apply.

Interpretation of Schedule

8(1)In this Schedule—

(a)references to the register are references to the register maintained under section 24 of this Act;

(b)references to registering a person are references to registering him in that register; and

(c)references to a person’s registration are references to his registration in that register;

and “unregistered” shall be construed accordingly.

(2)For the purposes of this Schedule a person carries out a taxable activity if a quantity of aggregate is subjected to commercial exploitation in the United Kingdom in circumstances in which he is responsible for its being so subjected.

Section 27.

SCHEDULE 5Aggregates levy: recovery and interest

Recovery of levy as debt due

1Aggregates levy shall be recoverable as a debt due to the Crown.

Assessments of amounts of levy due

2(1)Where it appears to the Commissioners—

(a)that any period is an accounting period by reference to which a person is liable to account for aggregates levy,

(b)that any aggregates levy for which that person is liable to account by reference to that period has become due, and

(c)that there has been a default by that person that falls within sub-paragraph (2) below,

they may assess the amount of the levy due from that person for that period to the best of their judgement and notify that amount to that person.

(2)The defaults falling within this sub-paragraph are—

(a)any failure to make a return required to be made by any provision made by or under this Part of this Act;

(b)any failure to keep any documents necessary to verify returns required to be made under any such provision;

(c)any failure to afford the facilities necessary to verify returns required to be made under any such provision;

(d)the making, in purported compliance with any requirement of any such provision to make a return, of an incomplete or incorrect return;

(e)any failure to comply with a requirement imposed by or under Schedule 4 to this Act.

(3)Where it appears to the Commissioners that a default falling within sub-paragraph (2) above is a default by a person on whom the requirement to make a return is imposed in his capacity as the representative of another person, sub-paragraph (1) above shall apply as if the reference to the amount of aggregates levy due included a reference to any aggregates levy due from that other person.

(4)In a case where—

(a)the Commissioners have made an assessment for any accounting period as a result of any person’s failure to make a return for that period,

(b)the levy assessed has been paid but no proper return has been made for that period,

(c)as a result of a failure (whether by that person or a representative of his) to make a return for a later accounting period, the Commissioners find it necessary to make another assessment under this paragraph in relation to the later period, and

(d)the Commissioners think it appropriate to do so in the light of the absence of a proper return for the earlier period,

they may, in the assessment in relation to the later period, specify an amount of aggregates levy due that is greater than the amount that they would have considered to be appropriate had they had regard only to the later period.

(5)Where an amount has been assessed and notified to any person under this paragraph, it shall be recoverable on the basis that it is an amount of aggregates levy due from him.

(6)Sub-paragraph (5) above does not have effect if, or to the extent that, the assessment in question has been withdrawn or reduced.

Supplementary assessments

3(1)If, where an assessment has been notified to any person under paragraph 2 above or this paragraph, it appears to the Commissioners that the amount which ought to have been assessed as due for any accounting period exceeds the amount that has already been assessed, the Commissioners may make a supplementary assessment of the amount of the excess and notify that person accordingly.

(2)Where an amount has been assessed and notified to any person under this paragraph it shall be recoverable on the basis that it is an amount of aggregates levy due from him.

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

Time limits for assessments

4(1)An assessment under paragraph 2 or 3 above of an amount of aggregates levy due for any accounting period—

(a)shall not be made more than two years after the end of the accounting period unless it is made within the period mentioned in sub-paragraph (2) below; and

(b)subject to sub-paragraph (3) below, shall not in any event be made more than three years after the end of that accounting period.

(2)The period referred to in sub-paragraph (1)(a) above is the period of one year after evidence of facts sufficient in the Commissioners' opinion to justify the making of the assessment first came to their knowledge.

(3)Subject to sub-paragraph (4) below, where aggregates levy has been lost—

(a)as a result of any conduct for which a person has been convicted of an offence involving fraud,

(b)in circumstances giving rise to liability to a penalty under paragraph 1 of Schedule 4 to this Act (failure to notify of registrability etc.), or

(c)as a result of conduct falling within paragraph 7(1) of Schedule 6 to this Act (evasion),

that levy may be assessed under paragraph 2 or 3 above as if, in sub-paragraph (1)(b) above, for “three years” there were substituted “twenty years”.

(4)Where, after a person’s death, the Commissioners propose to assess an amount of aggregates levy as due by reason of some conduct of the deceased—

(a)the assessment shall not be made more than three years after the death; and

(b)if the circumstances are as set out in sub-paragraph (3) above—

(i)the modification of sub-paragraph (1) above contained in that sub-paragraph shall not apply; but

(ii)any assessment which (applying that modification) could have been made immediately after the death may be made at any time within three years after it.

(5)Nothing in this paragraph shall prejudice the powers of the Commissioners under paragraph 2(4) above.

Penalty interest on unpaid levy

5(1)Where—

(a)a person makes a return for the purposes of any regulations made under section 25 of this Act (whether or not at the time required by the regulations), and

(b)the return shows that an amount of aggregates levy is due from him for the accounting period for which the return is made,

that amount shall carry penalty interest for the period specified in sub-paragraph (2) below.

(2)That period is the period which—

(a)begins with the day after that on which the person is required in accordance with regulations under section 25 of this Act to pay aggregates levy due from him for the accounting period in question; and

(b)ends with the day before that on which the amount shown in the return is paid.

Interest on overdue levy paid before assessment

6(1)Where—

(a)the circumstances are such that there was a time when an assessment could have been made under paragraph 2 or 3 above of an amount of levy due from any person, but

(b)before the making and notification to that person of any assessment of that amount, the amount was paid,

the whole of the amount paid shall be taken to have carried interest for the period specified in sub-paragraph (2).

(2)That period is the period which—

(a)begins with the day after that on which the person is required in accordance with regulations under section 25 of this Act to pay aggregates levy due from him for the accounting period to which the amount in question relates; and

(b)ends with the day before that on which that amount was paid.

(3)The interest payable by virtue of this paragraph shall be payable at the rate applicable under section 197 of the Finance Act 1996 (c. 8).

Penalty interest on levy where no return made

7(1)Where—

(a)the Commissioners make an assessment under paragraph 2 or 3 above of an amount of aggregates levy due from any person for any accounting period and notify it to him, and

(b)the assessment is made at a time after the time by which a return is required by regulations under section 25 of this Act to be made by that person for that accounting period and before any such return has been made,

that amount shall carry penalty interest for the period specified in sub-paragraph (2) below.

(2)That period is the period which—

(a)begins with the day after that on which the person is required in accordance with regulations under section 25 of this Act to pay aggregates levy due from him for the accounting period in question; and

(b)ends with the day before that on which the assessed amount is paid.

Ordinary and penalty interest on under-declared levy

8(1)Subject to sub-paragraph (4) below, where—

(a)the Commissioners make an assessment under paragraph 2 or 3 above of an amount of aggregates levy due from any person for any accounting period and notify it to him,

(b)the assessment is made after a return for the purposes of any regulations under section 25 has been made by that person for that accounting period, and

(c)the assessment is made on the basis that the amount (“the additional amount”) is due from him in addition to any amount shown in the return, or in a previous assessment made in relation to the accounting period,

the additional amount shall carry interest for the period specified in sub-paragraph (2) below.

(2)That period is the period which—

(a)begins with the day after that on which the person is required in accordance with regulations under section 25 of this Act to pay aggregates levy due from him for the accounting period in question; and

(b)ends with the day before the day on which the additional amount is paid.

(3)Interest under this paragraph—

(a)in respect of so much of the period specified in sub-paragraph (2) above as falls before the day on which the assessment is notified to the person in question, shall be payable at the rate applicable under section 197 of the Finance Act 1996 (c. 8); and

(b)in respect of the remainder (if any) of that period, shall be penalty interest.

(4)Where—

(a)the Commissioners make an assessment under paragraph 2 or 3 above of an amount of aggregates levy due from any person for any accounting period and notify it to him,

(b)they also specify a date for the purposes of this sub-paragraph, and

(c)the amount assessed is paid on or before that date,

the only interest carried by that amount under this paragraph shall be interest, at the rate given by sub-paragraph (3)(a) above, for the period before the day on which the assessment is notified.

Penalty interest on unpaid ordinary interest

9(1)Subject to sub-paragraph (2) below, where the Commissioners make an assessment under paragraph 12 below of an amount of interest payable at the rate given by paragraph 8(3)(a) above, that amount shall carry penalty interest for the period which—

(a)begins with the day on which the assessment is notified to the person on whom the assessment is made; and

(b)ends with the day before the day on which the assessed interest is paid.

(2)Where—

(a)the Commissioners make an assessment under paragraph 12 below of an amount of interest due from any person,

(b)they also specify a date for the purposes of this sub-paragraph, and

(c)the amount of interest assessed is paid on or before that date,

the amount paid before that date shall not carry penalty interest under this paragraph.

Penalty interest

10(1)Penalty interest under any of paragraphs 5 to 9 above shall be compound interest calculated—

(a)at the penalty rate; and

(b)with monthly rests.

(2)For this purpose the penalty rate is the rate found by—

(a)taking the rate applicable under section 197 of the Finance Act 1996 (c. 8) for the purposes of paragraph 8(3)(a) above; and

(b)adding 10 percentage points to that rate.

(3)Where a person is liable under any of paragraphs 5 to 9 above to pay any penalty interest, the Commissioners or, on appeal, an appeal tribunal may reduce the amount payable to such amount (including nil) as they think proper.

(4)Subject to sub-paragraph (5) below, where the person concerned satisfies the Commissioners or, on appeal, an appeal tribunal that there is a reasonable excuse for the conduct giving rise to the liability to pay penalty interest, that is a matter which (among other things) may be taken into account under sub-paragraph (3) above.

(5)In determining whether there is a reasonable excuse for the purposes of sub-paragraph (4) above, no account shall be taken of any of the following matters, that is to say—

(a)the insufficiency of the funds available to any person for paying any aggregates levy due or for paying the amount of the interest;

(b)the fact that there has, in the case in question or in that case taken with any other cases, been no or no significant loss of aggregates levy;

(c)the fact that the person liable to pay the interest or a person acting on his behalf has acted in good faith.

(6)In the case of interest reduced by the Commissioners under sub-paragraph (3) above an appeal tribunal, on an appeal relating to the interest, may cancel the whole or any part of the reduction made by the Commissioners.

Supplemental provisions about interest

11(1)Interest under any of paragraphs 5 to 9 above shall be paid without any deduction of income tax.

(2)Sub-paragraph (3) below applies where—

(a)an amount carries interest under any of paragraphs 5 to 9 above (or would do so apart from that sub-paragraph); and

(b)all or part of the amount turns out not to be due.

(3)In such a case—

(a)the amount or part that turns out not to be due shall not carry interest under the applicable paragraph and shall be treated as never having done so; and

(b)all such adjustments as are reasonable shall be made, including (subject to section 32 of, and Schedule 8 to, this Act) adjustments by way of repayment.

Assessments to interest

12(1)Where a person is liable for interest under any of paragraphs 5 to 9 above, the Commissioners may assess the amount due by way of interest and notify it to him accordingly.

(2)If, where an assessment has been notified to any person under sub-paragraph (1) above or this sub-paragraph, it appears to the Commissioners that the amount which ought to have been assessed exceeds the amount that has already been assessed, the Commissioners may make a supplementary assessment of the amount of the excess and notify that person accordingly.

(3)Where an amount has been assessed and notified to any person under this paragraph, it shall be recoverable as if it were aggregates levy due from him.

(4)Sub-paragraph (3) above—

(a)shall not apply so as to require any interest to be payable on interest except—

(i)in accordance with paragraph 9 above; or

(ii)in so far as it falls to be compounded in accordance with paragraph 10 above;

and

(b)shall not have effect if, or to the extent that, the assessment in question has been withdrawn or reduced.

(5)Paragraph 4 above shall apply in relation to assessments under this paragraph as if any assessment to interest were an assessment under paragraph 2 above to aggregates levy due for the period which is the relevant accounting period in relation to that interest.

(6)Subject to sub-paragraph (7) below, where a person—

(a)is assessed under this paragraph to an amount due by way of any interest, and

(b)is also assessed under paragraph 2 or 3 above for the accounting period which is the relevant accounting period in relation to that interest,

the assessments may be combined and notified to him as one assessment.

(7)A notice of a combined assessment under sub-paragraph (6) above must separately identify the interest being assessed.

(8)The relevant accounting period for the purposes of this paragraph is—

(a)in the case of interest on the levy due for any accounting period, that accounting period; and

(b)in the case of interest on interest (whether under paragraph 9 above or by virtue of any compounding under paragraph 10 above) the period which is the relevant accounting period for the interest on which the interest is payable.

(9)In a case where—

(a)the amount of any interest falls to be calculated by reference to aggregates levy which was not paid at the time when it should have been, and

(b)that levy cannot be readily attributed to any one or more accounting periods,

that levy shall be treated for the purposes of interest on any of that levy as aggregates levy due for such period or periods as the Commissioners may determine to the best of their judgement and notify to the person liable.

Further assessments to penalty interest

13(1)Where an assessment is made under paragraph 12 above to an amount of penalty interest under any of paragraphs 5 to 9 above—

(a)the notice of assessment shall specify a date, not later than the date of the notice of assessment, to which the amount of interest which is assessed is calculated; and

(b)if the interest continues to accrue after that date, a further assessment or further assessments may be made under paragraph 12 above in respect of the amounts so accruing.

(2)Where—

(a)an assessment to penalty interest is made specifying a date for the purposes of sub-paragraph (1)(a) above, and

(b)within such period as may for the purposes of this sub-paragraph have been notified by the Commissioners to the person liable for the interest, the amount on which the interest is payable is paid,

that amount shall be deemed for the purposes of any further liability to interest to have been paid on the specified date.

Recovery by distress

14In section 51(5) of the Finance Act 1997 (c. 16) (definition of relevant taxes for the purposes of the power to make provision by regulations for enforcement by distress of the relevant taxes), after paragraph (d) there shall be inserted—

(da)aggregates levy;.

Walking possession agreements

15(1)This paragraph applies where—

(a)in accordance with regulations made by virtue of paragraph 14 above a distress is authorised to be levied on the goods and chattels of a person;

(b)that person (“the person in default”) has refused or neglected to pay an amount of aggregates levy due from him or an amount recoverable from him as if it were aggregates levy; and

(c)the person levying the distress and the person in default have entered into a walking possession agreement.

(2)For the purposes of this paragraph a walking possession agreement is an agreement under which, in consideration of the property distrained upon being allowed to remain in the custody of the person in default and of the delaying of its sale, the person in default—

(a)acknowledges that the property specified in the agreement is under distraint and held in walking possession; and

(b)undertakes that, except with the consent of the Commissioners and subject to such conditions as they may impose, he will not remove or allow the removal of any of the specified property from the premises named in the agreement.

(3)Subject to sub-paragraph (4) below, if the person in default is in breach of the undertaking contained in a walking possession agreement, he shall be liable to a penalty equal to one half of the levy or other amount referred to in sub-paragraph (1)(b) above.

(4)The person in default shall not be liable to a penalty under sub-paragraph (3) above if he satisfies the Commissioners or, on appeal, an appeal tribunal that there is a reasonable excuse for the breach in question.

(5)This paragraph does not extend to Scotland.

Recovery by diligence

16In section 52(5) of the Finance Act 1997 (c. 16) (definition of relevant taxes for the purposes of the power to make provision by regulations for enforcement by diligence of the relevant taxes), after paragraph (d) there shall be inserted—

(da)aggregates levy;.

Preferential debts in England and Wales and Northern Ireland

17(1)In the Insolvency Act 1986 (c. 45)

(a)in section 386(1) (preferential debts), after “climate change levy,”, there shall be inserted “aggregates levy,”; and

(b)in Schedule 6 (categories of preferential debts), the paragraph set out in sub-paragraph (2) below shall be inserted after paragraph 3C.

(2)That paragraph is as follows—

3DAny aggregates levy which is referable to the period of 6 months next before the relevant date (which period is referred to below as “the 6-month period”).

For the purposes of this paragraph—

(a)where the whole of the accounting period to which any aggregates levy is attributable falls within the 6-month period, the whole amount of that levy is referable to that period; and

(b)in any other case the amount of any aggregates levy which is referable to the 6-month period is the proportion of the levy which is equal to such proportion (if any) of the accounting period in question as falls within the 6-month period;

and references here to accounting periods shall be construed in accordance with Part 2 of the Finance Act 2001..

(3)In the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19))—

(a)in Article 346(1) (preferential debts), after “climate change levy,”, there shall be inserted “aggregates levy,”; and

(b)in Schedule 4 (categories of preferential debts), the paragraph set out in sub-paragraph (4) below shall be inserted after paragraph 3C.

(4)That paragraph is as follows—

3DAny agggregates levy which is referable to the period of 6 months next before the relevant date (which period is referred to below as “the 6-month period”).

For the purposes of this paragraph—

(a)where the whole of the accounting period to which any aggregates levy is attributable falls within the 6-month period, the whole amount of that levy is referable to that period; and

(b)in any other case the amount of any aggregates levy which is referable to the 6-month period is the proportion of the levy which is equal to such proportion (if any) of the accounting period in question as falls within the 6-month period;

and references here to accounting periods shall be construed in accordance with Part 2 of the Finance Act 2001..

Preferred debts in Scotland

18(1)In paragraph 2 of Schedule 3 to the Bankruptcy (Scotland) Act 1985 (c. 66) (tax liabilities that are preferred debts), the following sub-paragraph shall be inserted before sub-paragraph (2)—

(1D)Any aggregates levy which is referable to the period of six months next before the relevant date.

(2)In that Schedule, the following paragraph shall be inserted after paragraph 8C—

Periods to which aggregates levy referable

8D(1)For the purpose of paragraph 2(1D) of Part 1 of this Schedule—

(a)where the whole of the accounting period to which any aggregates levy is attributable falls within the period of six months next before the relevant date (‘the relevant period’), the whole amount of that levy shall be referable to the relevant period; and

(b)in any other case the amount of any aggregates levy which shall be referable to the relevant period shall be the proportion of the levy which is equal to such proportion (if any) of the accounting period in question as falls within the relevant period.

(2)In sub-paragraph (1) above ‘accounting period’ shall be construed in accordance with Part 2 of the Finance Act 2001..

Interpretation of Schedule etc.

19(1)In this Schedule “penalty interest” shall be construed in accordance with paragraph 10 above.

(2)Any notification of an assessment under any provision of this Schedule to a person’s representative shall be treated for the purposes of this Part of this Act as notification to the person in relation to whom the representative acts.

(3)In this Schedule “representative”, in relation to any person, means—

(a)any of that person’s personal representatives;

(b)that person’s trustee in bankruptcy or liquidator;

(c)any person holding office as a receiver in relation to that person or any of his property;

(d)that person’s tax representative or any other person for the time being acting in a representative capacity in relation to that person.

(4)In this paragraph “trustee in bankruptcy” includes, as respects Scotland—

(a)an interim or permanent trustee (within the meaning of the Bankruptcy (Scotland) Act 1985); and

(b)a trustee acting under a trust deed (within the meaning of that Act).

Section 28.

SCHEDULE 6Aggregates levy: evasion, misdeclaration and neglect

Part 1Criminal offences

Evasion

1(1)A person is guilty of an offence if he is knowingly concerned in, or in the taking of steps with a view to—

(a)the fraudulent evasion by that person of any aggregates levy with which he is charged; or

(b)the fraudulent evasion by any other person of any aggregates levy with which that other person is charged.

(2)The references in sub-paragraph (1) above to the evasion of aggregates levy include references to obtaining, in circumstances where there is no entitlement to it, either a tax credit or a repayment of aggregates levy.

(3)A person guilty of an offence under this paragraph shall be liable (subject to sub-paragraph (4) below)—

(a)on summary conviction, to a penalty of the statutory maximum or to imprisonment for a term not exceeding six months, or to both;

(b)on conviction on indictment, to a penalty of any amount or to imprisonment for a term not exceeding seven years, or to both.

(4)In the case of any offence under this paragraph, where the statutory maximum is less than three times the sum of the amounts of aggregates levy which are shown to be amounts that were or were intended to be evaded, the penalty on summary conviction shall be the amount equal to three times that sum (instead of the statutory maximum).

(5)For the purposes of sub-paragraph (4) above the amounts of levy that were or were intended to be evaded shall be taken to include—

(a)the amount of any tax credit, and

(b)the amount of any repayment of aggregates levy,

which was, or was intended to be, obtained in circumstances where there was no entitlement to it.

(6)In determining for the purposes of sub-paragraph (4) above how much aggregates levy (in addition to any amount falling within sub-paragraph (5) above) was or was intended to be evaded, no account shall be taken of the extent (if any) to which any liability to aggregates levy of any person fell, or would have fallen, to be reduced by the amount of any tax credit or repayment of aggregates levy to which he was, or would have been, entitled.

Misstatements

2(1)A person is guilty of an offence if, with the requisite intent and for purposes connected with aggregates levy—

(a)he produces or provides, or causes to be produced or provided, any document which is false in a material particular; or

(b)he otherwise makes use of such a document;

and in this sub-paragraph “the requisite intent” means the intent to deceive any person or to secure that a machine will respond to the document as if it were a true document.

(2)A person is guilty of an offence if, in providing any information under any provision made by or under this Part of this Act—

(a)he makes a statement which he knows to be false in a material particular; or

(b)he recklessly makes a statement which is false in a material particular.

(3)A person guilty of an offence under this paragraph shall be liable (subject to sub-paragraph (4) below)—

(a)on summary conviction, to a penalty of the statutory maximum or to imprisonment for a term not exceeding six months, or to both;

(b)on conviction on indictment, to a penalty of any amount or to imprisonment for a term not exceeding seven years, or to both.

(4)In the case of any offence under this paragraph, where—

(a)the document referred to in sub-paragraph (1) above is a return required under any provision made by or under this Part of this Act, or

(b)the information referred to in sub-paragraph (2) above is contained in or otherwise relevant to such a return,

the amount of the penalty on summary conviction shall be whichever is the greater of the statutory maximum and the amount equal to three times the sum of the amounts (if any) by which the return understates any person’s liability to aggregates levy.

(5)In sub-paragraph (4) above the reference to the amount by which any person’s liability to aggregates levy is understated shall be taken to be equal to the sum of—

(a)the amount (if any) by which his gross liability was understated; and

(b)the amount (if any) by which any entitlements of his to tax credits and repayments of aggregates levy were overstated.

(6)In sub-paragraph (5) above “gross liability” means liability to aggregates levy before any deduction is made in respect of any entitlement to any tax credit or repayments of aggregates levy.

Conduct involving evasions or misstatements

3(1)A person is guilty of an offence under this paragraph if his conduct during any particular period must have involved the commission by him of one or more offences under the preceding provisions of this Schedule.

(2)For the purposes of any proceedings for an offence under this paragraph it shall be immaterial whether the particulars of the offence or offences that must have been committed are known.

(3)A person guilty of an offence under this paragraph shall be liable (subject to sub-paragraph (4) below)—

(a)on summary conviction, to a penalty of the statutory maximum or to imprisonment for a term not exceeding six months, or to both;

(b)on conviction on indictment, to a penalty of any amount or to imprisonment for a term not exceeding seven years, or to both.

(4)In the case of any offence under this paragraph, where the statutory maximum is less than three times the sum of the amounts of aggregates levy which are shown to be amounts that were or were intended to be evaded by the conduct in question, the penalty on summary conviction shall be the amount equal to three times that sum (instead of the statutory maximum).

(5)For the purposes of sub-paragraph (4) above the amounts of levy that were or were intended to be evaded by any conduct shall be taken to include—

(a)the amount of any tax credit, and

(b)the amount of any repayment of aggregates levy,

which was, or was intended to be, obtained in circumstances where there was no entitlement to it.

(6)In determining for the purposes of sub-paragraph (4) above how much aggregates levy (in addition to any amount falling within sub-paragraph (5) above) was or was intended to be evaded, no account shall be taken of the extent (if any) to which any liability to aggregates levy of any person fell, or would have fallen, to be reduced by the amount of any tax credit or repayments of aggregates levy to which he was, or would have been, entitled.

Preparations for evasion

4(1)Where a person—

(a)becomes a party to any agreement under or by means of which a quantity of taxable aggregate is or is to be subjected to commercial exploitation in the United Kingdom, or

(b)makes arrangements for any other person to become a party to such an agreement,

he is guilty of an offence if he does so in the belief that aggregates levy chargeable on the aggregate in question will be evaded.

(2)Subject to sub-paragraph (3) below, a person guilty of an offence under this paragraph shall be liable, on summary conviction, to a penalty of level 5 on the standard scale.

(3)In the case of any offence under this paragraph, where level 5 on the standard scale is less than three times the sum of the amounts of aggregates levy which are shown to be amounts that were or were intended to be evaded in respect of the aggregate in question, the penalty shall be the amount equal to three times that sum (instead of level 5 on the standard scale).

(4)For the purposes of sub-paragraph (3) above the amounts of levy that were or were intended to be evaded shall be taken to include—

(a)the amount of any tax credit, and

(b)the amount of any repayment of aggregates levy,

which was, or was intended to be, obtained in circumstances where there was no entitlement to it.

(5)In determining for the purposes of sub-paragraph (3) above how much aggregates levy (in addition to any amount falling within sub-paragraph (4) above) was or was intended to be evaded, no account shall be taken of the extent (if any) to which any liability to aggregates levy of any person fell, or would have fallen, to be reduced by the amount of any tax credit or repayments of aggregates levy to which he was, or would have been, entitled.

Criminal proceedings etc.

5Sections 145 to 155 of the Customs and Excise Management Act 1979 (c. 2) (proceedings for offences, mitigation of penalties and certain other matters) shall apply in relation to offences and penalties under this Part of this Schedule as they apply in relation to offences and penalties under the customs and excise Acts.

Arrest

6(1)Where an authorised person has reasonable grounds for suspecting that a fraud offence has been committed he may arrest anyone whom he has reasonable grounds for suspecting to be guilty of the offence.

(2)In this paragraph—

  • “authorised person” means any person acting under the authority of the Commissioners; and

  • “a fraud offence” means an offence under any of paragraphs 1 to 3 above.

Part 2Civil penalties

Evasion

7(1)Subject to sub-paragraph (5) below, where—

(a)any person engages in any conduct for the purpose of evading aggregates levy,

(b)at the time when that person engages in that conduct he is a person who is or is required to be registered, or would be so required but for an exemption by virtue of regulations under section 24(4) of this Act, and

(c)that conduct involves dishonesty (whether or not it is such as to give rise to criminal liability),

that person shall be liable to a penalty equal to the amount of the levy evaded, or (as the case may be) intended to be evaded, by his conduct.

(2)The references in sub-paragraph (1) above to evading aggregates levy include references to obtaining, in circumstances where there is no entitlement to it, either—

(a)a tax credit; or

(b)a repayment of aggregates levy.

(3)For the purposes of sub-paragraph (1) above the amount of levy that was or was intended to be evaded by any conduct shall be taken to include—

(a)the amount of any tax credit, and

(b)the amount of any repayment of aggregates levy,

which was, or was intended to be, obtained in circumstances where there was no entitlement to it.

(4)In determining for the purposes of sub-paragraph (1) above how much aggregates levy (in addition to any amount falling within sub-paragraph (3) above) was or was intended to be evaded, no account shall be taken of the extent (if any) to which any liability to aggregates levy of any person fell, or would have fallen, to be reduced by the amount of any tax credit or repayments of aggregates levy to which he was, or would have been, entitled.

(5)Where, by reason of conduct falling within sub-paragraph (1) above, a person is convicted of an offence (whether under this Act or otherwise) that person shall not by reason of that conduct be liable also to a penalty under this paragraph.

Liability of directors etc. for civil penalties

8(1)Where it appears to the Commissioners—

(a)that a body corporate is liable to a penalty under paragraph 7 above, and

(b)that the conduct giving rise to that penalty is, in whole or in part, attributable to the dishonesty of a person who is, or at the material time was, a director or managing officer of the body corporate (a “named officer”),

the Commissioners may serve a notice under this paragraph on the body corporate and on the named officer.

(2)A notice under this paragraph shall state—

(a)the amount of the penalty referred to in sub-paragraph (1)(a) above (“the basic penalty”); and

(b)that the Commissioners propose, in accordance with this paragraph, to recover from the named officer such portion of the basic penalty (which may be the whole of it) as is specified in the notice.

(3)Where a notice is served under this paragraph, the portion of the basic penalty specified in the notice shall be recoverable from the named officer as if he were personally liable under paragraph 7 above to a penalty which corresponds to that portion.

(4)Where a notice is served under this paragraph—

(a)the amount which may be assessed under Schedule 10 to this Act as the amount due by way of penalty from the body corporate shall be only so much (if any) of the basic penalty as is not assessed on and notified to a named officer; and

(b)the body corporate shall be treated as discharged from liability for so much of the basic penalty as is so assessed and notified.

(5)Subject to the following provisions of this paragraph, the giving of a notice under this paragraph as such shall not be a decision which may be reviewed under section 40 of this Act.

(6)Where a body corporate is assessed as mentioned in sub-paragraph (4)(a) above, the decisions of the Commissioners that may be reviewed in accordance with section 40 of this Act shall include their decision—

(a)as to the liability of the body corporate to a penalty; and

(b)as to the amount of the basic penalty that is specified in the assessment;

and sections 41 and 42 of this Act shall apply accordingly.

(7)Where an assessment is made on a named officer by virtue of this paragraph, the decisions which may be reviewed under section 40 of this Act at the request of the named officer shall include—

(a)the Commissioners' decisions in the case of the body corporate as to the matters mentioned in sub-paragraph (6)(a) and (b) above;

(b)their decision that the conduct of the body corporate referred to in sub-paragraph (1)(b) above is, in whole or in part, attributable to the dishonesty of the named officer; and

(c)their decision as to the portion of the penalty which the Commissioners propose to recover from him;

and sections 41 and 42 of this Act shall apply accordingly.

(8)In this paragraph a “managing officer”, in relation to a body corporate, means—

(a)any manager, secretary or other similar officer of the body corporate; or

(b)any person purporting to act in any such capacity or as a director.

(9)Where the affairs of a body corporate are managed by its members, this paragraph shall apply in relation to the conduct of a member in connection with his functions of management as if he were a director of the body corporate.

Misdeclaration or neglect

9(1)Subject to sub-paragraphs (3) to (5) below, where for an accounting period—

(a)a return is made which understates a person’s liability to aggregates levy or overstates his entitlement to any tax credit or repayment of aggregates levy, or

(b)at the end of the period of 30 days beginning on the date of the making of any assessment which understates a person’s liability to aggregates levy, that person has not taken all such steps as are reasonable to draw the understatement to the attention of the Commissioners,

the person concerned shall be liable to a penalty equal to 5 per cent. of the amount of the understatement of liability or (as the case may be) overstatement of entitlement.

(2)Where—

(a)a return for an accounting period—

(i)overstates or understates to any extent a person’s liability to aggregates levy, or

(ii)understates or overstates to any extent his entitlement to any tax credits or repayments of aggregates levy,

and

(b)that return is corrected—

(i)in such circumstances as may be prescribed by regulations made by the Commissioners, and

(ii)in accordance with such conditions as may be so prescribed,

by a return for a later accounting period which understates or overstates, to the corresponding extent, any liability or entitlement for the later period,

it shall be assumed for the purposes of this paragraph that the statement made by each such return is a correct statement for the accounting period to which the return relates.

(3)Conduct falling within sub-paragraph (1) above shall not give rise to liability to a penalty under this paragraph if the person concerned provides the Commissioners with full information with respect to the inaccuracy concerned—

(a)at a time when he has no reason to believe that enquiries are being made by the Commissioners into his affairs, so far as they relate to aggregates levy; and

(b)in such form and manner as may be prescribed by regulations made by the Commissioners or specified by them in accordance with any such regulations.

(4)Conduct falling within sub-paragraph (1) above shall not give rise to liability to a penalty under this paragraph if the person concerned satisfies the Commissioners or, on appeal, an appeal tribunal that there is a reasonable excuse for his conduct.

(5)Where, by reason of conduct falling within sub-paragraph (1) above—

(a)a person is convicted of an offence (whether under this Act or otherwise), or

(b)a person is assessed to a penalty under paragraph 7 above,

that person shall not by reason of that conduct be liable also to a penalty under this paragraph.

Part 3Interpretation of Schedule

10(1)References in this Schedule to obtaining a tax credit are references to bringing an amount into account as a tax credit for the purposes of aggregates levy on the basis that that amount is an amount which may be so brought into account in accordance with tax credit regulations.

(2)References in this Schedule to obtaining a repayment of aggregates levy are references to obtaining either—

(a)the payment or repayment of any amount, or

(b)the acknowledgement of a right to receive any amount,

on the basis that that amount is the amount of a repayment of aggregates levy to which there is an entitlement.

Section 29.

SCHEDULE 7Aggregates levy: information and evidence etc

Provision of information

1(1)Every person involved (in whatever capacity) in subjecting any aggregate to exploitation in the United Kingdom, or in any connected activities, shall provide the Commissioners with such information relating to the matters in which he is or has been involved as the Commissioners may reasonably require.

(2)Information required under sub-paragraph (1) above shall be provided to the Commissioners within such period after being required, and in such form, as the Commissioners may reasonably require.

(3)Subject to sub-paragraphs (4) and (5) below and to paragraph 3(5) of Schedule 10 to this Act (which relates to supplementary assessments of daily penalties), if a person fails to provide information which he is required to provide under this paragraph, he shall be liable—

(a)to a penalty of £250; and

(b)to a further penalty of £20 for every day after the last relevant date and before the day after that on which the required information is provided.

(4)Liability to a penalty specified in sub-paragraph (3) above shall not arise if the person required to provide the information satisfies the Commissioners or, on appeal, an appeal tribunal—

(a)in the case of the penalty under paragraph (a) of that sub-paragraph that there is a reasonable excuse—

(i)for the initial failure to provide the required information on or before the last relevant date; and

(ii)for every subsequent failure to provide it;

and

(b)in the case of any penalty under paragraph (b) of that sub-paragraph for any day, that there is a reasonable excuse for the failure to provide the information on or before that day.

(5)Where, by reason of any failure by any person to provide information required under this paragraph—

(a)that person is convicted of an offence (whether under this Act or otherwise), or

(b)that person is assessed to a penalty under paragraph 7 of Schedule 6 to this Act (penalty for evasion),

that person shall not by reason of that failure be liable also to a penalty under this paragraph.

(6)In this paragraph “the last relevant date” means the last day of the period within which the person in question was required to provide the information.

Records

2(1)The Commissioners may by regulations impose obligations to keep records on persons who are or are required to be registered and on persons who would be so required but for an exemption by virtue of regulations under section 24(4) of this Act.

(2)Regulations under this paragraph may be framed by reference to such records as may be stipulated in any notice published by the Commissioners in pursuance of the regulations and not withdrawn by a further notice.

(3)Regulations under this paragraph may—

(a)require any records kept in pursuance of the regulations to be preserved for such period, not exceeding six years, as may be specified in the regulations;

(b)authorise the Commissioners to direct that any such records need only be preserved for a shorter period than that specified in the regulations;

(c)authorise a direction to be made so as to apply generally or in such cases as the Commissioners may stipulate.

(4)Any duty under regulations under this paragraph to preserve records may be discharged by the preservation of the information contained in them by such means as the Commissioners may approve.

(5)The Commissioners may, as a condition of approving under sub-paragraph (4) above any means of preserving information contained in any records, impose such reasonable requirements as appear to them necessary for securing that the information will be as readily available to them as if the records themselves had been preserved.

(6)Subject to sub-paragraphs (7) and (8) below, a person who fails to preserve any record in compliance with—

(a)any regulations under this paragraph, or

(b)any notice, direction or requirement given or imposed under such regulations,

shall be liable to a penalty of £250.

(7)A failure such as is mentioned in sub-paragraph (6) above shall not give rise to any penalty under that sub-paragraph if the person required to preserve the record satisfies the Commissioners or, on appeal, an appeal tribunal that there is a reasonable excuse for the failure.

(8)Where, by reason of any such failure by any person as is mentioned in sub-paragraph (6) above—

(a)that person is convicted of an offence (whether under this Act or otherwise), or

(b)that person is assessed to a penalty under paragraph 7 of Schedule 6 to this Act (penalty for evasion),

that person shall not by reason of that failure be liable also to a penalty under this paragraph.

(9)The Commissioners may if they think fit at any time modify or withdraw any approval or requirement given or imposed for the purposes of this paragraph.

Evidence of records that are required to be preserved

3(1)Subject to the following provisions of this paragraph, where any obligation to preserve records is discharged in accordance with paragraph 2(4) above, a copy of any document forming part of the records shall be admissible in evidence in any proceedings, whether civil or criminal, to the same extent as the records themselves.

(2)A statement contained in a document produced by a computer shall not by virtue of this paragraph be admissible in evidence—

(a)in criminal proceedings in England and Wales, except in accordance with Part 2 of the Criminal Justice Act 1988 (c. 33);

(b)in civil proceedings in Scotland, except in accordance with sections 5 and 6 of the Civil Evidence (Scotland) Act 1988 (c. 32);

(c)in criminal proceedings in Scotland, except in accordance with Schedule 8 to the Criminal Procedure (Scotland) Act 1995 (c. 46); or

(d)in criminal proceedings in Northern Ireland, except in accordance with Part II of the Criminal Justice (Evidence, Etc.) (Northern Ireland) Order 1988 (S.I. 1988/1847 (N.I. 17)).

Production of documents

4(1)Every person involved (in whatever capacity) in subjecting any aggregate to exploitation in the United Kingdom, or in any connected activities, shall upon demand made by an authorised person produce or cause to be produced for inspection by that person any documents relating to the matters in which he is or has been involved.

(2)Where, by virtue of sub-paragraph (1) above, an authorised person has power to require the production of any documents from any person—

(a)he shall have the like power to require production of the documents concerned from any other person who appears to the authorised person to be in possession of them; and

(b)the production of any document by that other person in pursuance of a requirement under this sub-paragraph shall be without prejudice to any lien claimed by that other person on that document.

(3)The documents mentioned in sub-paragraphs (1) and (2) above shall be produced at such time and place as the authorised person may reasonably require.

(4)Subject to sub-paragraphs (5) and (6) below and to paragraph 3(5) of Schedule 10 to this Act (which relates to supplementary assessments of daily penalties), if a person fails to produce any document which he is required to produce under this paragraph, he shall be liable—

(a)to a penalty of £250; and

(b)to a further penalty of £20 for every day after the last relevant date and before the day after that on which the document is produced.

(5)Liability to a penalty specified in sub-paragraph (4) above shall not arise if the person required to produce the document in question satisfies the Commissioners or, on appeal, an appeal tribunal—

(a)in the case of the penalty under paragraph (a) of that sub-paragraph, that there is a reasonable excuse—

(i)for the initial failure to produce the document at the required time; and

(ii)for every subsequent failure to produce it;

and

(b)in the case of any penalty under paragraph (b) of that sub-paragraph for any day, that there is a reasonable excuse for the failure to produce the document on or before that day.

(6)Where, by reason of any failure by any person to provide information required under this paragraph—

(a)that person is convicted of an offence (whether under this Act or otherwise), or

(b)that person is assessed to a penalty under paragraph 7 of Schedule 6 to this Act (penalty for evasion),

that person shall not by reason of that failure be liable also to a penalty under this paragraph.

(7)In this paragraph “the last relevant date” means the last day of the period within which the person in question was required to produce the document.

Powers in relation to documents produced

5(1)An authorised person may take copies of, or make extracts from, any document produced under paragraph 4 above.

(2)If it appears to him to be necessary to do so, an authorised person may, at a reasonable time and for a reasonable period, remove any document produced under paragraph 4 above.

(3)An authorised person who removes any document under sub-paragraph (2) above shall, if requested to do so, provide a receipt for the document so removed.

(4)Where a lien is claimed on a document produced under paragraph 4(2) above, the removal of the document under sub-paragraph (2) above shall not be regarded as breaking the lien.

(5)Where a document removed by an authorised person under sub-paragraph (2) above is reasonably required for any purpose he shall, as soon as practicable, provide a copy of the document, free of charge, to the person by whom it was produced or caused to be produced.

(6)Where any documents removed under the powers conferred by this paragraph are lost or damaged, the Commissioners shall be liable to compensate their owner for any expenses reasonably incurred by him in replacing or repairing the documents.

Entry and inspection

6For the purpose of exercising any powers under this Part of this Act an authorised person may at any reasonable time enter and inspect premises used in connection with the carrying on of a business.

Entry and search

7(1)Where—

(a)a justice of the peace is satisfied on information on oath that there is reasonable ground for suspecting that a fraud offence which appears to be of a serious nature is being, has been or is about to be committed on any premises or that evidence of the commission of such an offence is to be found there, or

(b)in Scotland a justice (within the meaning of section 307 of the Criminal Procedure (Scotland) Act 1995 (c. 46)) is satisfied by evidence on oath as mentioned in paragraph (a) above,

he may issue a warrant in writing authorising any authorised person to enter those premises, if necessary by force, at any time within one month from the time of the issue of the warrant and to search them.

(2)A person who enters the premises under the authority of the warrant may—

(a)take with him such other persons as appear to him to be necessary;

(b)seize and remove any such documents or other things at all found on the premises as he has reasonable cause to believe may be required as evidence for the purposes of proceedings in respect of a fraud offence which appears to him to be of a serious nature;

(c)search, or cause to be searched, any person found on the premises whom he has reasonable cause to believe to be in possession of any documents or other things which may be so required.

(3)Sub-paragraph (2) above shall not authorise any person to be searched by a member of the opposite sex.

(4)The powers conferred by a warrant under this paragraph shall not be exercisable—

(a)by more than such number of authorised persons as may be specified in the warrant;

(b)outside such periods of the day as may be so specified; or

(c)if the warrant so provides, otherwise than in the presence of a constable in uniform.

(5)An authorised person seeking to exercise the powers conferred by a warrant under this paragraph or, if there is more than one such authorised person, such one of them as is in charge of the search shall provide a copy of the warrant endorsed with his name as follows—

(a)if the occupier of the premises concerned is present at the time the search is to begin, the copy shall be supplied to the occupier;

(b)if at that time the occupier is not present but a person who appears to the authorised person to be in charge of the premises is present, the copy shall be supplied to that person;

(c)if neither paragraph (a) nor paragraph (b) above applies, the copy shall be left in a prominent place on the premises.

(6)In this paragraph “a fraud offence” means an offence under any of paragraphs 1 to 3 of Schedule 6 to this Act.

Order for access to recorded information etc.

8(1)Where, on an application by an authorised person, a justice of the peace or, in Scotland, a justice (within the meaning of section 307 of the Criminal Procedure (Scotland) Act 1995 (c. 46)) is satisfied that there are reasonable grounds for believing—

(a)that an offence in connection with aggregates levy is being, has been or is about to be committed, and

(b)that any recorded information (including any document of any nature at all) which may be required as evidence for the purpose of any proceedings in respect of such an offence is in the possession of any person,

he may make an order under this paragraph.

(2)An order under this paragraph is an order that the person who appears to the justice to be in possession of the recorded information to which the application relates shall—

(a)give an authorised person access to it, and

(b)permit an authorised person to remove and take away any of it which he reasonably considers necessary,

not later than the end of the period of seven days beginning with the date of the order, or the end of such longer period as the order may specify.

(3)The reference in sub-paragraph (2)(a) above to giving an authorised person access to the recorded information to which the application relates includes a reference to permitting the authorised person to take copies of it or to make extracts from it.

(4)Where the recorded information consists of information contained in a computer, an order under this paragraph shall have effect as an order to produce the information—

(a)in a form in which it is visible and legible; and

(b)if the authorised person wishes to remove it, in a form in which it can be removed.

(5)This paragraph is without prejudice to the preceding paragraphs of this Schedule.

Removal of documents etc.

9(1)An authorised person who removes anything in the exercise of a power conferred by or under paragraph 7 or 8 above shall, if so requested by a person showing himself—

(a)to be the occupier of premises from which it was removed, or

(b)to have had custody or control of it immediately before the removal,

provide that person with a record of what he removed.

(2)The authorised person shall provide the record within a reasonable time from the making of the request for it.

(3)Subject to sub-paragraph (7) below, if a request for permission to be allowed access to anything which—

(a)has been removed by an authorised person, and

(b)is retained by the Commissioners for the purposes of investigating an offence,

is made to the officer in overall charge of the investigation by a person who had custody or control of the thing immediately before it was so removed, or by someone acting on behalf of such a person, the officer shall allow the person who made the request access to it under the supervision of an authorised person.

(4)Subject to sub-paragraph (7) below, if a request for a photograph or copy of any such thing is made to the officer in overall charge of the investigation by a person who had custody or control of the thing immediately before it was so removed, or by someone acting on behalf of such a person, the officer shall—

(a)allow the person who made the request access to it under the supervision of an authorised person for the purpose of photographing it or copying it; or

(b)photograph or copy it, or cause it to be photographed or copied.

(5)Subject to sub-paragraph (7) below, where anything is photographed or copied under sub-paragraph (4)(b) above, the officer shall supply the photograph or copy, or cause it to be supplied, to the person who made the request.

(6)The photograph or copy shall be supplied within a reasonable time from the making of the request.

(7)There is no duty under this paragraph to allow access to anything, or to supply a photograph or copy of anything, if the officer in overall charge of the investigation for the purposes of which it was removed has reasonable grounds for believing that to do so would prejudice—

(a)that investigation;

(b)the investigation of an offence other than the offence for the purposes of the investigation of which the thing was removed; or

(c)any criminal proceedings which may be brought as a result of the investigation of which he is in charge or any such investigation as is mentioned in paragraph (b) above.

(8)Any reference in this paragraph to the officer in overall charge of the investigation is a reference to the person whose name and address are endorsed on the warrant concerned as being the officer so in charge.

Enforcement of paragraph 9

10(1)Where, on an application made as mentioned in sub-paragraph (2) below, the appropriate judicial authority is satisfied that a person has failed to comply with a requirement imposed by paragraph 9 above, the authority may order that person to comply with the requirement within such time and in such manner as may be specified in the order.

(2)An application under sub-paragraph (1) above shall not be made except—

(a)in the case of a failure to comply with any of the requirements imposed by paragraph 9(1) and (2) above—

(i)by the occupier of the premises from which the thing in question was removed; or

(ii)by the person who had custody or control of it immediately before it was so removed;

(b)in any other case, by the person who had such custody or control.

(3)In this paragraph “the appropriate judicial authority” means—

(a)in England and Wales, a magistrates' court;

(b)in Scotland, the sheriff;

(c)in Northern Ireland, a court of summary jurisdiction, as defined in Article 2(2)(a) of the Magistrates' Courts (Northern Ireland) Order 1981 (S.I. 1981/1675 (N.I. 26)) .

(4)In England and Wales and Northern Ireland, an application for an order under this paragraph shall be made by way of complaint; and sections 21 and 42(2) of the InterpretationAct (Northern Ireland) 1954 (c. 33 (N.I.)) shall apply as if any reference in those provisions to any enactment included a reference to this paragraph.

Power to take samples

11(1)An authorised person, if it appears to him necessary for the protection of the revenue against mistake or fraud, may at any time take, from material which he has reasonable cause to believe is aggregate which is intended to be, is being, or has been subjected to exploitation in the United Kingdom, such samples as he may require with a view to determining how the material ought to be treated, or to have been treated, for the purposes of aggregates levy.

(2)Any sample taken under this paragraph shall be disposed of in such manner as the Commissioners may direct.

Evidence by certificate

12(1)In any proceedings a certificate of the Commissioners—

(a)that a person was or was not at any time registered,

(b)that any return required by regulations made under section 25 of this Act has not been made or had not been made at any time,

(c)that any levy shown as due in a return made in pursuance of regulations made under section 25 of this Act has not been paid, or

(d)that any amount shown as due in any assessment made under this Part of this Act has not been paid,

shall be evidence or, in Scotland, sufficient evidence of that fact.

(2)A photograph of any document provided to the Commissioners for the purposes of this Part of this Act and certified by them to be such a photograph shall be admissible in any proceedings, whether civil or criminal, to the same extent as the document itself.

(3)In any proceedings any document purporting to be a certificate under sub-paragraph (1) or (2) above shall be taken to be such a certificate unless the contrary is shown.

Inducements to provide information

13(1)This paragraph applies—

(a)to any criminal proceedings against a person in respect of an offence in connection with or in relation to aggregates levy; and

(b)to any proceedings against a person for the recovery of any sum due from him in connection with or in relation to that levy.

(2)Statements made or documents produced or provided by or on behalf of a person shall not be inadmissible in any proceedings to which this paragraph applies by reason only that—

(a)a matter falling within sub-paragraph (3) or (4) below has been drawn to that person’s attention; and

(b)he was or may have been induced, as a result, to make the statements or to produce or provide the documents.

(3)The matters falling within this sub-paragraph are—

(a)that, in relation to aggregates levy, the Commissioners may assess an amount due by way of a civil penalty instead of instituting criminal proceedings;

(b)that it is the practice of the Commissioners (without giving any undertaking as to whether they will make such an assessment in any case) to be influenced by whether a person—

(i)has made a full confession of any dishonest conduct to which he has been a party; and

(ii)has otherwise co-operated to the full with any investigation.

(4)The matter falling within this sub-paragraph is the fact that the Commissioners or, on appeal, an appeal tribunal have power under any provision of this Part of this Act to reduce a penalty.

Disclosure of information

14(1)Notwithstanding any obligation not to disclose information that would otherwise apply but subject to sub-paragraph (2) below, the Commissioners may disclose any information obtained or held by them in or in connection with the carrying out of their functions in relation to aggregates levy to any of the following—

(a)any Minister of the Crown;

(b)the Scottish Ministers;

(c)any Minister, within the meaning of the Northern Ireland Act 1998 (c. 47), or any Northern Ireland department;

(d)the National Assembly for Wales;

(e)the Environment Agency;

(f)the Scottish Environment Protection Agency;

(g)a mineral planning authority in England and Wales (within the meaning of the Town and Country Planning Act 1990 (c. 8));

(h)a planning authority in Scotland;

(i)a district council in Northern Ireland;

(j)an authorised officer of any person mentioned in paragraphs (a) to (i) above.

(2)Information shall not be disclosed under sub-paragraph (1) above except for the purpose of assisting a person falling within paragraphs (a) to (j) of that sub-paragraph in the performance of his duties.

(3)Notwithstanding any such obligation as is mentioned in sub-paragraph (1) above, any person mentioned in sub-paragraph (1)(a) to (j) above may disclose information—

(a)to the Commissioners, or

(b)to an authorised officer of the Commissioners,

for the purpose of assisting the Commissioners in the performance of duties in relation to aggregates levy.

(4)Information that has been disclosed to a person by virtue of this paragraph shall not be disclosed by him except—

(a)to another person to whom (instead of him) disclosure could by virtue of this paragraph have been made; or

(b)for the purpose of any proceedings connected with the operation of any provision made by or under any enactment relating to the environment or to aggregates levy.

(5)References in the preceding provisions of this paragraph to an authorised officer of any person (“the principal”) are to any person who has been designated by the principal as a person to and by whom information may be disclosed by virtue of this paragraph.

(6)Where the principal is a person falling within any of paragraphs (a) to (c) above, the principal shall notify the Commissioners in writing of the name of any person designated by the principal for the purposes of this paragraph.

(7)No charge may be made for any disclosure made by virtue of this paragraph.

(8)In this paragraph “enactment” includes an enactment contained in an Act of the Scottish Parliament or in any Northern Ireland legislation.

Interpretation of Schedule

15In this Schedule—

  • “authorised person” means any person acting under the authority of the Commissioners;

  • “connected activities”, in relation to the exploitation of aggregate in the United Kingdom, means any activities carried out—

    (a)

    for purposes connected with the carrying out of any such exploitation or with any transaction involving the carrying out of any such exploitation; or

    (b)

    for the purposes of, in connection with or in relation to the carrying on of any business involving any such exploitation.

Section 32.

SCHEDULE 8Aggregates levy: repayments and credits

Reimbursement arrangements

1(1)The Commissioners may by regulations make provision for reimbursement arrangements made by any person to be disregarded for the purposes of section 32(2) of this Act except where the arrangements—

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

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

(2)In this paragraph “reimbursement arrangements” means any arrangements for the purposes of a claim to a repayment of aggregates levy which—

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

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

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

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

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

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

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

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

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

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

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

Interest payable by the Commissioners

2(1)Where, due to an error on the part of the Commissioners, a person—

(a)has paid to them by way of aggregates levy an amount which was not levy due and which they are in consequence liable to repay to him,

(b)has failed to claim a repayment of levy to which he was entitled, under tax credit regulations, in respect of any tax credits, or

(c)has suffered delay in receiving payment of an amount due to him from them in connection with aggregates levy,

then, if and to the extent that they would not be liable to do so apart from this paragraph, they shall (subject to the following provisions of this paragraph) pay interest to him on that amount for the applicable period.

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

(3)In that sub-paragraph the amounts referred to in paragraph (c)—

(a)do not include any amount payable under this paragraph;

(b)do not include the amount of any interest for which provision is made by virtue of section 30(3)(f) of this Act; but

(c)do include any amount due (in respect of an adjustment of overpaid interest) by way of a repayment under—

(i)paragraph 11(3) of Schedule 5 to this Act; or

(ii)paragraph 6(3) of Schedule 10 to this Act.

(4)The applicable period, in a case falling within sub-paragraph (1)(a) above, is the period—

(a)beginning with the date on which the payment is received by the Commissioners; and

(b)ending with the date on which they authorise payment of the amount on which the interest is payable.

(5)The applicable period, in a case falling within sub-paragraph (1)(b) or (c) above, is the period—

(a)beginning with the date on which, apart from the error, the Commissioners might reasonably have been expected to authorise payment of the amount on which the interest is payable; and

(b)ending with the date on which they in fact authorise payment of that amount.

(6)In determining the applicable period for the purposes of this paragraph there shall be left out of account any period by which the Commissioners' authorisation of the payment of interest is delayed by circumstances beyond their control.

(7)The reference in sub-paragraph (6) above to a period by which the Commissioners' authorisation of the payment of interest is delayed by circumstances beyond their control includes, in particular, any period which is referable to—

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

(b)any failure by any person to provide the Commissioners—

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

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

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

(c)the making, as part of or in association with any claim for the payment or repayment of the amount on which interest is claimed, of a claim to anything to which the claimant was not entitled.

(8)In determining for the purposes of sub-paragraph (7) above whether any period of delay is referable to a failure by any person to provide information in response to a request by the Commissioners, there shall be taken to be so referable, except so far as may be provided for by regulations, any period which—

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

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

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

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

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

(9)The Commissioners shall not be liable to pay interest under this paragraph except on the making of a claim for that purpose.

(10)A claim under this paragraph must be in writing and must be made not more than three years after the end of the applicable period to which it relates.

(11)References in this paragraph—

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

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

include references to the discharge by way of set-off (whether in accordance with regulations under paragraph 9 or 10 below or otherwise) of the Commissioners' liability to pay that amount.

(12)Interest under this paragraph shall be payable at the rate applicable under section 197 of the Finance Act 1996 (c. 8).

Assessment for excessive repayment

3(1)Where—

(a)any amount has been paid at any time to any person by way of a repayment of aggregates levy, and

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

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

(2)Where—

(a)any amount has been paid to any person by way of repayment of levy,

(b)the repayment is in respect of a tax credit the entitlement to which arose in a case falling within section 30(1)(e) (bad debts),

(c)the whole or any part of the credit is withdrawn on account of the payment of the whole or any part of the debt taken as bad,

(d)the amount of the repayment exceeded the amount which the Commissioners would have been liable to repay had the withdrawal taken place before the determination of the amount of the repayment,

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

(3)Where any person is liable to pay any amount to the Commissioners in pursuance of an obligation imposed by virtue of paragraph 1(4)(a) above, the Commissioners may, to the best of their judgement, assess the amount due from that person and notify it to him.

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

(a)an assessment is made on any person under this paragraph in respect of a repayment of levy made in relation to any accounting period, and

(b)the Commissioners have power under Schedule 5 to this Act to make an assessment on that person to an amount of aggregates levy due from that person for that period,

the assessments may be combined and notified to him as one assessment.

(5)A notice of a combined assessment under sub-paragraph (4) above must separately identify the amount being assessed in respect of repayments of levy.

Assessment for overpayments of interest

4Where—

(a)any amount has been paid to any person by way of interest under paragraph 2 above, but

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

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

Assessments under paragraphs 3 and 4

5(1)An assessment under paragraph 3 or 4 above shall not be made more than two years after the time when evidence of facts sufficient in the opinion of the Commissioners to justify the making of the assessment comes to the knowledge of the Commissioners.

(2)Where an amount has been assessed and notified to any person under paragraph 3 or 4 above, it shall be recoverable as if it were aggregates levy due from him.

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

Interest on amounts assessed

6(1)Where an assessment is made under paragraph 3 or 4 above, the whole of the amount assessed shall carry interest, for the period specified in sub-paragraph (2) below, as follows—

(a)so much of that amount as represents the amount of a tax credit claimed by a person who was not entitled to it shall carry penalty interest; and

(b)so much of that amount as does not carry penalty interest under paragraph (a) above shall carry interest at the rate applicable under section 197 of the Finance Act 1996 (c. 8).

(2)That period is the period which—

(a)begins with the day after that on which the person is notified of the assessment; and

(b)ends with the day before that on which payment is made of the amount assessed.

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

(4)Penalty interest under this paragraph shall be compound interest calculated—

(a)at the penalty rate; and

(b)with monthly rests.

(5)For this purpose the penalty rate is the rate found by—

(a)taking the rate applicable under section 197 of the Finance Act 1996 for the purposes of sub-paragraph (1)(b) above; and

(b)adding 10 percentage points to that rate.

(6)Where a person is liable under this paragraph to pay any penalty interest, the Commissioners or, on appeal, an appeal tribunal may reduce the amount payable to such amount (including nil) as they think proper.

(7)Subject to sub-paragraph (8) below, where the person concerned satisfies the Commissioners or, on appeal, an appeal tribunal that there is a reasonable excuse for the conduct giving rise to the liability to pay penalty interest, that is a matter which (among other things) may be taken into account under sub-paragraph (6) above.

(8)In determining whether there is a reasonable excuse for the purposes of sub-paragraph (7) above, no account shall be taken of any of the following matters, that is to say—

(a)the insufficiency of the funds available to any person for paying any aggregates levy due or for paying the amount of the interest;

(b)the fact that there has, in the case in question or in that case taken with any other cases, been no or no significant loss of aggregates levy;

(c)the fact that the person liable to pay the interest or a person acting on his behalf has acted in good faith.

(9)In the case of interest reduced by the Commissioners under sub-paragraph (6) above an appeal tribunal, on an appeal relating to the interest, may cancel the whole or any part of the reduction made by the Commissioners.

Assessments to interest under paragraph 6

7(1)Where any person is liable to interest under paragraph 6 above the Commissioners may assess the amount due by way of interest and notify it to him accordingly.

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

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

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

(5)Where an assessment is made under this paragraph to an amount of interest under paragraph 6 above—

(a)the notice of assessment shall specify a date, not later than the date of the notice of assessment, to which the amount of interest which is assessed is calculated; and

(b)if the interest continues to accrue after that date, a further assessment or further assessments may be made under this paragraph in respect of the amounts so accruing.

(6)Where—

(a)an assessment to interest is made specifying a date for the purposes of sub-paragraph (5)(a) above, and

(b)within such period as may for the purposes of this sub-paragraph have been notified by the Commissioners to the person liable for the interest, the amount on which the interest is payable is paid,

that amount shall be deemed for the purposes of any further liability to interest to have been paid on the specified date.

Supplementary assessments

8If it appears to the Commissioners that the amount which ought to have been assessed in an assessment under paragraph 3, 4 or 7 above exceeds the amount which was so assessed, then—

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

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

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

Set-off of or against amounts due under this Part of this Act

9(1)The Commissioners may by regulations make provision in relation to any case where—

(a)a person is under a duty to pay to the Commissioners at any time an amount or amounts in respect of aggregates levy; and

(b)the Commissioners are under a duty to pay to that person at the same time an amount or amounts in respect of that levy or any of the other taxes under their care and management.

(2)Regulations under this paragraph may provide that if the total of the amount or amounts mentioned in sub-paragraph (1)(a) above exceeds the total of the amount or amounts mentioned in sub-paragraph (1)(b) above, the latter shall be set off against the former.

(3)Regulations under this paragraph may provide that if the total of the amount or amounts mentioned in sub-paragraph (1)(b) above exceeds the total of the amount or amounts mentioned in sub-paragraph (1)(a) above, the Commissioners may set off the latter in paying the former.

(4)Regulations under this paragraph may provide that if the total of the amount or amounts mentioned in sub-paragraph (1)(a) above is the same as the total of the amount or amounts mentioned in sub-paragraph (1)(b) above no payment need be made in respect of the former or the latter.

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

(6)Regulations under this paragraph may include provision treating any duty to pay mentioned in sub-paragraph (1) above as discharged accordingly.

(7)References in sub-paragraph (1) above to an amount in respect of a particular tax include references not only to an amount of tax itself but also to other amounts such as interest and penalties that are or may be recovered as if they were amounts of tax.

(8)In this paragraph “tax” includes levy or duty.

Set-off of or against other taxes and duties

10(1)The Commissioners may by regulations make provision in relation to any case where—

(a)a person is under a duty to pay to the Commissioners at any time an amount or amounts in respect of any tax (or taxes) under their care and management other than aggregates levy; and

(b)the Commissioners are under a duty, at the same time, to make any repayment of aggregates levy to that person or to make any other payment to him of any amount or amounts in respect of aggregates levy.

(2)Regulations under this paragraph may provide that if the total of the amount or amounts mentioned in sub-paragraph (1)(a) above exceeds the total of the amount or amounts mentioned in sub-paragraph (1)(b) above, the latter shall be set off against the former.

(3)Regulations under this paragraph may provide that if the total of the amount or amounts mentioned in sub-paragraph (1)(b) above exceeds the total of the amount or amounts mentioned in sub-paragraph (1)(a) above, the Commissioners may set off the latter in paying the former.

(4)Regulations under this paragraph may provide that if the total of the amount or amounts mentioned in sub-paragraph (1)(a) above is the same as the total of the amount or amounts mentioned in sub-paragraph (1)(b) above no payment need be made in respect of the former or the latter.

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

(6)Regulations under this paragraph may include provision treating any duty to pay mentioned in sub-paragraph (1) above as discharged accordingly.

(7)References in sub-paragraph (1) above to an amount in respect of a particular tax include references not only to an amount of tax itself but also to other amounts such as interest and penalties that are or may be recovered as if they were amounts of tax.

(8)In this paragraph “tax” includes levy or duty.

Restriction on powers to provide for set-off

11(1)Regulations made under paragraph 9 or 10 above shall not require any such amount or amounts as are mentioned in sub-paragraph (1)(b) of that paragraph (“the credit”) to be set against any such amount or amounts as are mentioned in sub-paragraph (1)(a) of that paragraph (“the debit”) in any case where—

(a)an insolvency procedure has been applied to the person entitled to the credit;

(b)the credit became due after that procedure was so applied; and

(c)the liability to pay the debit either arose before that procedure was so applied or (having arisen afterwards) relates to, or to matters occurring in the course of, the carrying on of any business at times before the procedure was so applied.

(2)For the purposes of this paragraph, an insolvency procedure is applied to a person if—

(a)a bankruptcy order, winding-up order or administration order is made in relation to that person or an award of sequestration is made on that person’s estate;

(b)that person is put into administrative receivership;

(c)that person passes a resolution for voluntary winding up;

(d)any voluntary arrangement approved in accordance with—

(i)Part 1 or 8 of the Insolvency Act 1986 (c. 45), or

(ii)Part II or Chapter II of Part VIII of the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)) ,

comes into force in relation to that person;

(e)a deed of arrangement registered in accordance with—

(i)the Deeds of Arrangement Act 1914 (c. 47), or

(ii)Chapter I of Part VIII of that Order,

takes effect in relation to that person;

(f)a person is appointed as the interim receiver of some or all of that person’s property under section 286 of the Insolvency Act 1986 or Article 259 of the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19));

(g)a person is appointed as the provisional liquidator in relation to that person under section 135 of that Act or Article 115 of that Order;

(h)an interim order is made under Part 8 of that Act, or Chapter I of Part VIII of that Order, in relation to that person; or

(i)that person’s estate becomes vested in any other person as that person’s trustee under a trust deed (within the meaning of the Bankruptcy (Scotland) Act 1985 (c. 66)).

(3)In this paragraph references, in relation to any person, to the application of an insolvency procedure to that person shall not include—

(a)the making of a bankruptcy order, winding-up order, administration order or award of sequestration at a time when any such arrangement or deed as is mentioned in paragraph (d), (e) or (i) of sub-paragraph (2) above is in force in relation to that person;

(b)the making of a winding-up order at any of the following times, that is to say—

(i)immediately upon the discharge of an administration order made in relation to that person;

(ii)when that person is being wound up voluntarily;

(iii)when that person is in administrative receivership;

or

(c)the making of an administration order in relation to that person at any time when that person is in administrative receivership.

(4)For the purposes of this paragraph a person shall be regarded as being in administrative receivership throughout any continuous period for which (disregarding any temporary vacancy in the office of receiver) there is an administrative receiver of that person.

(5)In this paragraph—

  • “administration order” means an administration order under section 8 of the Insolvency Act 1986 (c. 45) or Article 21 of the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)) ;

  • “administrative receiver” means an administrative receiver within the meaning of section 251 of that Act of 1986 or Article 5(1) of that Order of 1989.

Supplemental provisions of Schedule

12(1)Any notification of an assessment under any provision of this Schedule to a person’s representative shall be treated for the purposes of this Part of this Act as notification to the person in relation to whom the representative acts.

(2)In this paragraph “representative”, in relation to any person, means—

(a)any of that person’s personal representatives;

(b)that person’s trustee in bankruptcy or liquidator;

(c)any person holding office as a receiver in relation to that person or any of his property;

(d)that person’s tax representative or any other person for the time being acting in a representative capacity in relation to that person.

(3)In this paragraph “trustee in bankruptcy” includes, as respects Scotland—

(a)an interim or permanent trustee (within the meaning of the Bankruptcy (Scotland) Act 1985); and

(b)a trustee acting under a trust deed (within the meaning of that Act).

(4)The powers conferred by paragraphs 9 and 10 of this Schedule are without prejudice to any power of the Commissioners to provide by tax credit regulations for any amount to be set against another.

Section 35.

SCHEDULE 9Aggregates levy: group treatment

Eligibility for group treatment

1Two or more bodies corporate are eligible to be treated as members of a group for the purposes of this Part of this Act if—

(a)each of them has an established place of business in the United Kingdom; and

(b)they are all under the same control.

Application for group treatment

2(1)Subject to sub-paragraph (3) below, where an application is made to the Commissioners with respect to two or more bodies corporate and those bodies are all eligible to be treated as members of the same group, then, from the specified time—

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

(b)such one of them as is specified in the application shall be the representative member.

(2)Subject to sub-paragraph (3) below, where—

(a)any bodies corporate are treated as members of a group for the purposes of this Part of this Act, and

(b)an application is made to the Commissioners for the addition to the group of a body corporate that is eligible to be treated as a member of the group,

then, from the specified time, that body shall be included among the bodies so treated.

(3)The Commissioners may refuse an application under sub-paragraph (1) or (2) above if, and only if, it appears to them necessary to do so for the protection of the revenue; and an application that is refused under this sub-paragraph shall be, and be treated as always having been, ineffective.

(4)Where—

(a)it appears to the Commissioners that an application has been made for the purposes of this paragraph for a body corporate to be treated as a member of a group, but

(b)that body is not eligible to be treated as a member of that group,

the Commissioners shall give notice to the applicant that the application is ineffective.

(5)The Commissioners shall not refuse an application under sub-paragraph (3) above after the end of the period of ninety days beginning with the day on which the application is received by the Commissioners.

Modification of group treatment

3(1)Subject to sub-paragraph (2) below, where any bodies corporate are treated as members of a group for the purposes of this Part of this Act and an application for the purpose is made to the Commissioners, then, from the specified time—

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

(b)one of those bodies corporate shall be substituted for another body corporate as the representative member; or

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

(2)The Commissioners may refuse an application made for the purpose mentioned in sub-paragraph (1)(a) or (c) above if, and only if—

(a)the case is not one appearing to them to fall within paragraph 4(2)(a) and (b) below; and

(b)it appears to them necessary to refuse the application for the protection of the revenue.

(3)The Commissioners may refuse an application made for the purpose mentioned in sub-paragraph (1)(b) above if, and only if, it appears to them necessary to do so for the protection of the revenue.

(4)An application that is refused under this paragraph shall be, and be treated as always having been, ineffective.

(5)The specified time for the purposes of an application under sub-paragraph (1) above shall not be before the beginning of the accounting period which is current when the application is made.

Termination of group treatment

4(1)If it appears to the Commissioners necessary to do so for the protection of the revenue, the Commissioners may, by notice given to any body corporate that is treated as a member of a group and to the representative member, terminate that treatment from such time as may be specified in the notice.

(2)Where—

(a)a body corporate is treated as a member of a group, and

(b)it appears to the Commissioners that it is not eligible to be treated as a member of that group,

they shall, by notice given to the body corporate and the representative member, terminate that treatment from such time as may be specified in the notice.

(3)Where—

(a)a body corporate ceases as from any time to be treated as a member of a group,

(b)immediately before that time that body was the representative member,

(c)there are two or more other bodies corporate which will continue after that time to be treated as members of the group, and

(d)none of those bodies corporate is substituted from that time, or from before that time, as the representative member of the group under paragraph 3(1)(b) above,

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

(4)The time specified in a notice under sub-paragraph (1) above shall not be a time before the day on which the notice is given to the representative member.

(5)Subject to sub-paragraph (6) below, the time specified in a notice under sub-paragraph (2) or (3) above may be a time before the giving of the notice.

(6)In the case of a notice given under sub-paragraph (2) above in respect of a body corporate’s having ceased to be eligible to be treated as a member of a group, the time specified in the notice shall not be before the time when it so ceased.

Applications relating to group treatment

5An application under this Schedule with respect to any bodies corporate must be made by one of those bodies or by the person controlling them.

Notifications relating to group treatment

6(1)Where—

(a)two or more bodies corporate are treated as members of a group for the purposes of this Part of this Act, and

(b)any of those bodies ceases to be eligible to be so treated,

the body corporate which ceases to be so eligible shall notify the Commissioners of that fact.

(2)A body corporate which is designated as representative member in relation to any other bodies corporate shall not cease to have an established place of business in the United Kingdom without first notifying the Commissioners of that fact.

(3)A body corporate which fails to comply with sub-paragraph (1) or (2) above shall be liable to a penalty of £250.

Supplemental regulations about applications and notifications

7(1)For the purposes of any provision made by or under this Schedule for an application to be made to the Commissioners, regulations made by the Commissioners may make provision—

(a)as to the time within which the application is to be made;

(b)as to the form and manner in which the application is to be made;

(c)as to the information and other particulars to be contained in or provided with any application.

(2)For those purposes the Commissioners may also by regulations impose obligations requiring a person who has made an application to notify the Commissioners if any information contained in or provided in connection with that application is or becomes inaccurate.

(3)The power under this paragraph to make regulations as to the time within which any application is to be made shall include power to authorise the Commissioners to extend the time for the making of an application.

(4)Sub-paragraphs (1) to (3) above shall apply for the purposes of any provision made by or under this Schedule for any matter to be notified to the Commissioners as they apply for the purposes of any provision so made for an application to be made to them; and for this purpose references to the making of the application shall be construed as references to the giving of the notification.

Interpretation of Schedule

8(1)For the purposes of this Schedule two or more bodies are under the same control if—

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

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

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

(2)For the purposes of this Schedule a body corporate shall be taken to control another body corporate if, and only if—

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

(b)it is that body’s holding company within the meaning of section 736 of the Companies Act 1985 (c. 6).

(3)For the purposes of this Schedule an individual or individuals shall be taken to control a body corporate if, and only if (were he or they a company) he or they would be that body’s holding company within the meaning of section 736 of the Companies Act 1985.

(4)In this Schedule “the specified time”, in relation to an application made under paragraph 2(1) or (2) or 3(1) above, means the beginning of such accounting period as may be specified in the application.

Section 46.

SCHEDULE 10Aggregates levy: assessment of civil penalties and interest on them

Preliminary

1(1)In this Schedule “civil penalty” means any penalty liability to which—

(a)is imposed by or under this Part of this Act; and

(b)arises otherwise than in consequence of a person’s conviction for a criminal offence.

(2)In this Schedule—

(a)references to a person’s being liable to a civil penalty include references to his being a person from whom the whole or any part of a civil penalty is recoverable by virtue of paragraph 8 of Schedule 6 to this Act; and

(b)references, in relation to a person from whom the whole or any part of a civil penalty is so recoverable, to the penalty to which he is liable are references to so much of the penalty as is recoverable from him.

(3)Any notification of an assessment under any provision of this Schedule to a person’s representative shall be treated for the purposes of this Part of this Act as notification to the person in relation to whom the representative acts.

(4)In this paragraph “representative”, in relation to any person, means—

(a)any of that person’s personal representatives;

(b)that person’s trustee in bankruptcy or liquidator;

(c)any person holding office as a receiver in relation to that person or any of his property;

(d)that person’s tax representative or any other person for the time being acting in a representative capacity in relation to that person.

(5)In this paragraph “trustee in bankruptcy” includes, as respects Scotland—

(a)an interim or permanent trustee (within the meaning of the Bankruptcy (Scotland) Act 1985 (c. 66)); and

(b)a trustee acting under a trust deed (within the meaning of that Act).

Assessments to penalties etc.

2(1)Where a person is liable to a civil penalty, the Commissioners may assess the amount due by way of penalty and notify it to him accordingly.

(2)If, where an assessment has been notified to any person under sub-paragraph (1) above or this sub-paragraph, it appears to the Commissioners that the amount which ought to have been assessed exceeds the amount that has already been assessed, the Commissioners may make a supplementary assessment of the amount of the excess and notify that person accordingly.

(3)The fact that any conduct giving rise to a civil penalty may have ceased before an assessment is made under this paragraph shall not affect the power of the Commissioners to make such an assessment.

(4)Where an amount has been assessed and notified to any person under this paragraph, it shall be recoverable as if it were aggregates levy due from him.

(5)Sub-paragraph (4) above—

(a)shall not apply so as to require any interest to be payable on a penalty otherwise than in accordance with this Schedule; and

(b)shall not have effect if, or to the extent that, the assessment in question has been withdrawn or reduced.

(6)Subject to sub-paragraph (7) below, where a person—

(a)is assessed under this paragraph to an amount due by way of a penalty, and

(b)is also assessed under any one or more provisions of Schedule 5 to this Act for an accounting period to which the conduct attracting the penalty is referable,

the assessments may be combined and notified to him as one assessment.

(7)A notice of a combined assessment under sub-paragraph (6) above must separately identify the penalty being assessed.

(8)The power to make an assessment under this paragraph is subject to paragraph 8(4) of Schedule 6 to this Act.

Further assessments to daily penalties

3(1)This paragraph applies where an assessment is made under paragraph 2 above to an amount of a civil penalty to which any person is liable—

(a)under paragraph 1(3) of Schedule 7 to this Act (failure to provide information); or

(b)under paragraph 4(4) of that Schedule (failure to produce a document).

(2)The notice of assessment shall specify a time, not later than the end of the day of the giving of the notice of assessment, to which the amount of any daily penalty is calculated.

(3)For the purposes of sub-paragraph (2) above “daily penalty” means—

(a)in a case within sub-paragraph (1)(a) above, a penalty imposed by virtue of paragraph 1(3)(b) of Schedule 7 to this Act; and

(b)in a case within sub-paragraph (1)(b) above, a penalty imposed by virtue of paragraph 4(4)(b) of that Schedule.

(4)If further penalties accrue in respect of a continuing failure after that date to provide the information or, as the case may be, produce the document, a further assessment or further assessments may be made under paragraph 2 above in respect of the amounts so accruing.

(5)Where—

(a)an assessment to a civil penalty is made specifying a date for the purposes of sub-paragraph (2) above, and

(b)the failure in question is remedied within such period as may for the purposes of this sub-paragraph have been notified by the Commissioners to the person liable for the penalty,

the failure shall be deemed for the purposes of any further liability to civil penalties to have been remedied on the specified date.

Time limits on penalty assessments

4(1)Subject to sub-paragraphs (2) and (3) below, an assessment under paragraph 2 above to a civil penalty shall not be made more than three years after the conduct to which the penalty relates.

(2)Subject to sub-paragraph (3) below, if aggregates levy has been lost—

(a)as a result of any conduct for which a person has been convicted of an offence involving fraud,

(b)in circumstances giving rise to liability to a penalty under paragraph 1 of Schedule 4 to this Act, or

(c)as a result of conduct falling within paragraph 7(1) of Schedule 6 to this Act (evasion),

an assessment may be made for any civil penalty relating to that conduct as if, in sub-paragraph (1) above, for “three years” there were substituted “twenty years”.

(3)Where, after a person’s death, the Commissioners propose to assess an amount of a civil penalty due by reason of some conduct of the deceased—

(a)the assessment shall not be made more than three years after the death; and

(b)if the circumstances are as set out in sub-paragraph (2) above—

(i)the modification of sub-paragraph (1) above contained in that sub-paragraph shall not apply; but

(ii)any assessment which (applying that modification) could have been made immediately after the death may be made at any time within three years after it.

Penalty interest on unpaid penalties

5(1)Subject to sub-paragraph (2) below, where the Commissioners make an assessment under paragraph 2 above of any civil penalty to which a person is liable the amount of that penalty shall carry penalty interest for the period which—

(a)begins with the day on which the assessment is notified to the person on whom the assessment is made; and

(b)ends with the day before the day on which the assessed penalty is paid.

(2)Where—

(a)the Commissioners make an assessment under paragraph 2 above of an amount of any civil penalty to which any person is liable,

(b)they also specify a date for the purposes of this sub-paragraph, and

(c)the amount of the penalty assessed is paid on or before that date,

the amount paid before that date shall not carry penalty interest under this paragraph.

(3)Penalty interest under this paragraph shall be compound interest calculated—

(a)at the penalty rate; and

(b)with monthly rests.

(4)For this purpose the penalty rate is the rate found by—

(a)taking the rate applicable under section 197 of the Finance Act 1996 (c. 8) for the purposes of paragraph 8(3)(a) of Schedule 5 to this Act; and

(b)adding 10 percentage points to that rate.

(5)Where a person is liable under this paragraph to pay any penalty interest, the Commissioners or, on appeal, an appeal tribunal may reduce the amount payable to such amount (including nil) as they think proper.

(6)Subject to sub-paragraph (7) below, where the person concerned satisfies the Commissioners or, on appeal, an appeal tribunal that there is a reasonable excuse for the conduct giving rise to the liability to pay penalty interest, that is a matter which (among other things) may be taken into account under sub-paragraph (5) above.

(7)In determining whether there is a reasonable excuse for the purposes of sub-paragraph (6) above, no account shall be taken of any of the following matters, that is to say—

(a)the insufficiency of the funds available to any person for paying any aggregates levy or penalty due or for paying the amount of the interest;

(b)the fact that there has, in the case in question or in that case taken with any other cases, been no or no significant loss of aggregates levy;

(c)the fact that the person liable to pay the interest or a person acting on his behalf has acted in good faith.

(8)In the case of interest reduced by the Commissioners under sub-paragraph (5) above, an appeal tribunal, on an appeal relating to the interest, may cancel the whole or any part of the reduction made by the Commissioners.

Supplemental provisions about interest

6(1)Interest under paragraph 5 above shall be paid without any deduction of income tax.

(2)Sub-paragraph (3) below applies where—

(a)an amount carries interest under paragraph 5 above (or would do so apart from that sub-paragraph); and

(b)all or part of the amount turns out not to be due.

(3)In such a case—

(a)the amount or part that turns out not to be due shall not carry interest under paragraph 5 above and shall be treated as never having done so; and

(b)all such adjustments as are reasonable shall be made, including (subject to section 32 of, and Schedule 8 to, this Act) adjustments by way of repayment.

Assessments to penalty interest on unpaid penalties

7(1)Where a person is liable for interest under paragraph 5 above, the Commissioners may assess the amount due by way of interest and notify it to him accordingly.

(2)If, where an assessment has been notified to any person under sub-paragraph (1) above or this sub-paragraph, it appears to the Commissioners that the amount which ought to have been assessed exceeds the amount that has already been assessed, the Commissioners may make a supplementary assessment of the amount of the excess and notify that person accordingly.

(3)Where an amount has been assessed and notified to any person under this paragraph, it shall be recoverable as if it were aggregates levy due from him.

(4)Sub-paragraph (3) above—

(a)shall not apply so as to require any interest to be payable on interest (except in so far as it falls to be compounded in accordance with paragraph 5(3) above); and

(b)shall not have effect if, or to the extent that, the assessment in question has been withdrawn or reduced.

(5)Paragraph 4 above shall apply in relation to assessments under this paragraph as if any assessment to interest on a penalty were an assessment under paragraph 2 above to the penalty in question.

(6)Subject to sub-paragraph (7) below, where a person—

(a)is assessed under this paragraph to an amount due by way of any interest on a penalty, and

(b)is also assessed under any one or more provisions of Schedule 5 to this Act for the accounting period to which the conduct attracting the penalty is referable,

the assessments may be combined and notified to him as one assessment.

(7)A notice of a combined assessment under sub-paragraph (6) above must separately identify the interest being assessed.

Further assessments to interest on penalties

8(1)Where an assessment is made under paragraph 7 above to an amount of penalty interest under paragraph 5 above—

(a)the notice of assessment shall specify a date, not later than the date of the notice of assessment, to which the amount of interest which is assessed is calculated; and

(b)if the interest continues to accrue after that date, a further assessment or further assessments may be made under paragraph 7 above in respect of the amounts so accruing.

(2)Where—

(a)an assessment to penalty interest is made specifying a date for the purposes of sub-paragraph (1)(a) above, and

(b)within such period as may for the purposes of this sub-paragraph have been notified by the Commissioners to the person liable for the interest, the amount on which the interest is payable is paid,

that amount shall be deemed for the purposes of any further liability to interest to have been paid on the specified date.

Section 53.

SCHEDULE 11Children’s tax credit: baby rate: supplementary

Introduction

1Schedule 13B to the Taxes Act 1988 (children’s tax credit: provisions applicable where child lives with more than one adult in a year of assessment) is amended as follows.

Child living with married or unmarried couple

2After paragraph 3(2) (provisions applicable where neither partner has income above the basic rate limit: entitlement where both partners claim in respect of a relevant child) insert—

(2A)If a relevant child is a qualifying baby the reference in sub-paragraph (2)(b) above to the amount mentioned in section 257AA(2) is to the higher amount applicable by virtue of subsection (2A) of that section..

Election that credit should go to lower-earning partner

3In paragraph 5(4) (circumstances in which election may be made for current year of assessment), after paragraph (c) insert—

(ca)a relevant child is born in that year, or.

Child living with more than one adult: other cases

4(1)Paragraph 6 (provisions applicable in case of child living with more than one adult) is amended as follows.

(2)After sub-paragraph (4) (apportionment of entitlement) insert—

(4A)If the child is a qualifying baby the reference in sub-paragraph (4) above to the amount mentioned in section 257AA(2) is to the higher amount applicable by virtue of subsection (2A) of that section..

(3)After sub-paragraph (7) (claim by person with more than one allotted proportion) insert—

(7A)Where sub-paragraph (7) above applies in relation to a person, and any child in respect of which a proportion has been, or could have been, allotted to that person is a qualifying baby, the reference in that sub-paragraph to the amount mentioned in section 257AA(2) is to the higher amount applicable by virtue of subsection (2A) of that section..

Combined cases

5In paragraph 7 (provisions applicable where child lives with more than one couple or with one or more couples and one or more other adults), after sub-paragraph (2) insert—

(3)Where paragraph 6(4A) or (7A) above applies, the reference in sub-paragraph (2) above to the amount mentioned in section 257AA(2) is to the higher amount applicable by virtue of subsection (2A) of that section..

Change of circumstances

6(1)Paragraph 8 (change of circumstances) is amended as follows.

(2)In sub-paragraph (4) (periods before and after change to be treated as years of assessment for certain purposes), after “section 257AA” insert “(except subsection (4A))”.

(3)After sub-paragraph (5) (apportionment of amounts) insert—

(5A)If the child is a qualifying baby the references in sub-paragraph (5) above to the amount specified in section 257AA(2) are to the higher amount applicable by virtue of subsection (2A) of that section..

Section 57.

SCHEDULE 12Mileage allowances

Part 1New Schedule 12AA to the Taxes Act 1988

After Schedule 12 to the Taxes Act 1988 insert—

SCHEDULE 12AAMileage allowances: interpretation

Introduction

1(1)The provisions of this Schedule apply for the purposes of sections 197AD to 197AG (Schedule E exemption for mileage allowance payments and passenger payments and mileage allowance relief).

(2)Expressions defined in this Schedule for those purposes have the same meaning for the purposes of this Schedule.

(3)In this Schedule “mileage allowance payments” has the meaning given by section 197AD(2) and “passenger payments” has the meaning given by section 197AE(2).

Business travel

2“Business travel” means travelling the expenses of which, if incurred and defrayed by the employee in question out of the emoluments of his employment, would (in the absence of sections 197AD to 197AF) be deductible under section 198(1) (general relief for necessary expenses).

Qualifying vehicles

3(1)“Qualifying vehicle” means a car, van, motor cycle or cycle.

(2)“Car” means a mechanically propelled road vehicle which is not—

(a)a goods vehicle,

(b)a motor cycle, or

(c)a vehicle of a type not commonly used as a private vehicle and unsuitable to be so used.

(3)“Van” means a mechanically propelled road vehicle which—

(a)is a goods vehicle, and

(b)has a design weight not exceeding 3,500 kilograms,

and which is not a motor cycle.

(4)“Motor cycle” has the meaning given by section 185(1) of the Road Traffic Act 1988.

(5)“Cycle” has the meaning given by section 192(1) of that Act.

(6)In this paragraph—

  • “design weight” means the weight which a vehicle is designed or adapted not to exceed when in normal use and travelling on a road laden; and

  • “goods vehicle” means a vehicle of a construction primarily suited for the conveyance of goods or burden of any description.

The approved amount: mileage allowance payments

4(1)The approved amount for mileage allowance payments that is applicable to a kind of vehicle is—

M × R

where—

  • M is the number of miles of business travel by the employee (other than as a passenger), using that kind of vehicle, in the tax year in question; and

  • R is the rate applicable for that kind of vehicle.

(2)The rates applicable are as follows—

Kind of vehicleRate
Car or van40p per mile for the first 10,000 miles;
25p per mile after that
Motor cycle24p per mile.
Cycle20p per mile.

Note: The reference above to “the first 10,000 miles” is to the total number of miles of business travel in relation to the employment or any associated employment, by car or van, in the tax year in question.

One employment is associated with another if—

(a)the employer is the same;

(b)the employers are partnerships or bodies and an individual or another partnership or body has control over both of them; or

(c)the employers are associated companies (as defined in section 416).

Section 168(12) (meaning of “control”) applies for the purposes of paragraph (b).

(3)The Treasury may by regulations amend sub-paragraph (2) so as to alter the rates or rate bands.

The approved amount: passenger payments

5(1)The approved amount for passenger payments is—

M × R

where—

  • M is the number of miles of business travel by the employee, by car or van, for which the employee carries a qualifying passenger in the tax year in question and in respect of which passenger payments are made; and

  • R is 5p per mile.

(2)If the employee carries more than one qualifying passenger for all or part of a tax year, the approved amount for passenger payments is the total of the amounts calculated under sub-paragraph (1) in respect of each qualifying passenger.

(3)In this paragraph “qualifying passenger” means a passenger who is also an employee for whom the travel is business travel.

(4)The Treasury may by regulations amend sub-paragraph (1) so as to alter the rate.

Company vehicles

6(1)A vehicle is a “company vehicle” in a tax year if in that year—

(a)the vehicle is made available to the employee by reason of his employment and is not available for his private use, or

(b)the employee is chargeable to tax in respect of the vehicle under section 154, 157 or 159AA (charge where benefit provided or car or van available for private use), or

(c)in the case of a car or van, the employee would be chargeable to tax in respect of it under section 157 or 159AA but for section 159 or 159AB (exception for pooled cars and vans), or

(d)in the case of a cycle, the employee would be chargeable to tax in respect of it under section 154 but for section 197AC(1)(a) (exception for cycles made available).

(2)Section 168(6) (when cars and vans are made available for private use and are made available by reason of employment) applies for the purposes of sub-paragraph (1).

Employment

7“Employment” includes an office and “employee” includes an office-holder.

Tax year

8“Tax year” means a year of assessment..

Part 2Consequential amendments

The Taxes Act 1988

1(1)Section 153 of the Taxes Act 1988 (payments in respect of expenses) is amended as follows.

(2)In subsection (1), after “provisions of this Chapter” insert “and sections 197AD and 197AE”.

(3)In subsection (2), after “section” insert “197AG,”.

2In section 163(4)(b) of that Act (expenses connected with living accommodation), after “section” insert “197AG,”.

3In section 167(2)(b) of that Act (employment to which Chapter 2 of Part 5 applies), after “section” insert “197AG,”.

4(1)Section 168 of that Act (Chapter 2 of Part 5: other interpretative provisions) is amended as follows.

(2)In subsection (5)(c), after “would” insert “(in the absence of sections 197AD to 197AF)”.

(3)In subsection (5A)(c), after “would” insert “(in the absence of sections 197AD to 197AF)”.

5In section 192(5) of that Act (relief for foreign emoluments), after “195(7),” insert “197AG,”.

6In section 198 of that Act (general relief for necessary expenses), after subsection (4) add—

(5)No deduction may be made under this section in respect of qualifying travelling expenses incurred in connection with the use by an employee or office-holder of a vehicle that is not a company vehicle if—

(a)mileage allowance payments (within the meaning of section 197AD(2)) are made to that person in respect of the use of the vehicle; or

(b)mileage allowance relief is available in respect of the use of the vehicle by that person.

  • “Company vehicle” has the meaning given by paragraph 6 of Schedule 12AA..

7In section 200A(1)(b) (incidental overnight expenses), for “195, 198 or 332” substitute “195 or 332 or (in the absence of sections 197AD to 197AF) 198”.

8For section 200C(2) (cap on travelling and subsistence expenditure exempt under section 200B) substitute—

(2)Section 200B shall not apply in the case of any expenditure incurred in paying or reimbursing any expenses of travelling or subsistence, except to the extent that, on the assumptions in subsection (2A) below—

(a)mileage allowance relief would be available in respect of those expenses if no mileage allowance payments (within the meaning of section 197AD(2)) had been made; or

(b)those expenses would be deductible under section 198.

(2A)The assumptions are—

(a)that the employee undertook the training in question in the performance of the duties of his office or employment under the employer; and

(b)that the employee incurred the expenses in question out of the emoluments of that office or employment..

9For section 200F(2) (cap on travelling and subsistence expenditure exempt under section 200E) substitute—

(2)Section 200E shall not apply in the case of any expenditure incurred in paying or reimbursing any expenses of travelling or subsistence, except to the extent that, on the assumptions in subsection (2A) below—

(a)mileage allowance relief would be available in respect of those expenses if no mileage allowance payments (within the meaning of section 197AD(2)) had been made; or

(b)those expenses would be deductible under section 198.

(2A)The assumptions are—

(a)that the employee undertook the education or training in question in the performance of the duties of—

(i)his office or employment under the employer, or

(ii)where the employee no longer holds an office or employment under the employer, the last office or employment that he did hold under the employer; and

(b)that the employee incurred the expenses in question out of the emoluments of that office or employment..

10In section 332 of that Act (expenditure of ministers of religion), after subsection (3) insert—

(3A)No deduction may be made under subsection (3) above in respect of qualifying travelling expenses incurred in connection with the use by a clergyman or minister of a vehicle that is not a company vehicle if—

(a)mileage allowance payments are made to that person in respect of the use of the vehicle; or

(b)mileage allowance relief is available in respect of the use of the vehicle by that person.

(3B)In subsection (3A)—

  • “company vehicle” has the meaning given by paragraph 6 of Schedule 12AA;

  • “mileage allowance payments” has the meaning given by section 197AD(2); and

  • “qualifying travelling expenses” has the meaning given by section 198(1A)..

11In section 578A(1) of that Act (deductions for expenditure on car hire)—

(a)after paragraph (a) insert “or”; and

(b)omit paragraph (c) and the word “or” immediately preceding it.

12For section 589(6) (cap on travelling expenses exempt under section 588) substitute—

(6)The travelling expenses referred to in subsection (5)(d) above are—

(a)those in respect of which, on the assumptions in subsection (6A) below, mileage allowance relief would be available if no mileage allowance payments (within the meaning of section 197AD(2)) had been made; or

(b)those which, on those assumptions, would be deductible under section 198.

(6A)The assumptions are—

(a)that attendance at the course is one of the duties of the employee’s office or employment; and

(b)if the employee has in fact ceased to be employed by the employer, that he continues to be employed by him..

13For section 589B(4) (cap on travelling expenses exempt under section 589A) substitute—

(4)In relation to services, allowable travelling expenses are—

(a)those in respect of which, on the assumptions in subsection (4A) below, mileage allowance relief would be available if no mileage allowance payments (within the meaning of section 197AD(2)) had been made; or

(b)those which, on those assumptions, would be deductible under section 198.

(4A)The assumptions are—

(a)that receipt of the services is one of the duties of the employee’s office or employment; and

(b)if the employee has in fact ceased to be employed by the employer, that he continues to be employed by him..

14In section 646(2)(b) (meaning of “net relevant earnings”), after “section” insert “197AG,”.

15In paragraph 1A of Schedule 12 (foreign earnings), after “195(7),” insert “197AG,”.

Finance Act 2000 (c. 17)

16In Part 2 of Schedule 12 to the Finance Act 2000 (provision of services through an intermediary: the deemed Schedule E payment), in paragraph 11(4), after “higher-paid employment);” insert—

(ab)for the purposes of section 197AG of that Act (mileage allowance relief);.

Section 61.

SCHEDULE 13Employee share ownership plans: amendments

Introductory

1Schedule 8 to the Finance Act 2000 (c. 17) (employee share ownership plans) is amended in accordance with this Schedule.

The employment requirement

2(1)In paragraph 14—

(a)in sub-paragraph (1), for paragraph (b)(i) and (ii) (periods counting towards qualifying period) substitute “of a qualifying company”, and

(b)after that sub-paragraph insert—

(1A)Except in the case of a group plan, a qualifying company means—

(a)the company, or

(b)a company that when the individual was employed by it was an associated company—

(i)of the company, or

(ii)of another company qualifying under this paragraph.

(1B)In the case of a group plan, a qualifying company means—

(a)a company that is a participating company at the end of the qualifying period, or

(b)a company that when the individual was employed by it was a participating company, or

(c)a company that when the individual was employed by it was an associated company of—

(i)a company qualifying under paragraph (a) or (b), or

(ii)another company qualifying under this paragraph..

(2)This paragraph has effect in relation to awards of shares (within the meaning of Schedule 8 to the Finance Act 2000 (c. 17)) made after the passing of this Act.

Meaning of “salary”

3(1)In paragraph 48—

(a)after “(PAYE)” insert “or which would be if that individual were within the scope of Schedule E”, and

(b)after “(expenses and benefits in kind)” add “or which would have been had the individual been within the scope of Schedule E”.

(2)This paragraph has effect in relation to any award of partnership shares (within the meaning of Schedule 8 to the Finance Act 2000 (c. 17)) in relation to which the eligibility time falls after the passing of this Act.

(3)For this purpose “the eligibility time” means the time at which an individual, in order to participate in the award, is required, in accordance with paragraph 13(1)(b) of that Schedule, to be eligible to so participate.

No charge to tax on award of shares, etc.

4(1)After paragraph 78(2) add—

(3)Incidental expenditure of the trustees or the employer in operating the plan is not treated as giving rise to any charge to income tax on employees..

(2)This paragraph has effect for the year 2001-02 and subsequent years of assessment.

Charge on disposal of beneficial interest during holding period

5(1)Omit paragraph 82(2) (reduction for tax paid on capital receipts).

(2)This amendment shall be deemed always to have had effect.

Charge on distributions in respect of unappropriated shares

6(1)In paragraph 88—

(a)in sub-paragraph (3) (period during which special trust rates of tax do not apply if shares are readily convertible assets), for “Subject to sub-paragraph (4),” substitute “If any of the shares in the company in question are readily convertible assets at the time the shares are acquired by the trustees,”, and

(b)in sub-paragraph (4) (period during which special trust rates of tax do not apply if shares are not readily convertible assets), in paragraph (b) for “the shares in question” substitute “any of the shares in that company”.

(2)This paragraph has effect in relation to any shares acquired by the trustees of an employee share ownership plan after the passing of this Act.

(3)For the purposes of sub-paragraph (2), “the trustees of an employee share ownership plan” means the body of persons established in accordance with paragraph 68 of Schedule 8 to the Finance Act 2000 (c. 17).

Dividend shares ceasing to be subject to plan: tax credit

7(1)In paragraph 93(2), for “when the relevant dividend is paid over to him” substitute “when the shares cease to be subject to the plan”.

(2)This amendment shall be deemed always to have had effect.

Gains accruing to trustees

8(1)In paragraph 98—

(a)in sub-paragraph (2) (period within which shares that are readily convertible assets must be awarded if gains not to be chargeable), for the words from the beginning to “they” substitute “If any of the shares in the company in question are readily convertible assets at the time the shares”, and

(b)in sub-paragraph (3) (period within which shares that are not readily convertible assets must be awarded if gains not to be chargeable)—

(i)for the words from the beginning to “assets” substitute “If at the time of the acquisition of the shares by the trustees none of the shares in the company in question are readily convertible assets”, and

(ii)for “the shares in question” substitute “any of the shares in that company”.

(2)This paragraph has effect in relation to any shares acquired by the trustees of an employee share ownership plan after the passing of this Act.

(3)For the purposes of sub-paragraph (2), “the trustees of an employee share ownership plan” means the body of persons established in accordance with paragraph 68 of Schedule 8 to the Finance Act 2000.

Section 62.

SCHEDULE 14Enterprise management incentives: amendments

Introductory

1Schedule 14 to the Finance Act 2000 (enterprise management incentives) is amended in accordance with this Schedule.

Period of notice

2In paragraph 2 (notice of option to be given to Inland Revenue), in subsection (1) for “30 days” substitute “92 days”.

3In paragraph 4 (notice of enquiry), in sub-paragraph (4) for “30 days” substitute “92 days”.

General requirements to be met by option

4In paragraph 8 (general requirements to be met by qualifying option), for paragraph (c) substitute—

(c)the maximum value of the relevant company’s shares in respect of which unexercised options can exist (see paragraph 11).

Purpose of granting option

5In paragraph 9 (purpose of granting the option), for “a key” substitute “an”.

Value of options in respect of a company’s shares

6For paragraph 11 (number of employees who may hold qualifying options) substitute—

Maximum value of options in respect of relevant company’s shares

11(1)The total value of shares in the relevant company in respect of which unexercised qualifying options exist must not exceed £3 million.

(2)An option is not a qualifying option if the limit in sub-paragraph (1) is already exceeded at the time it is granted.

(3)If the grant of an option causes that limit to be exceeded the option is not a qualifying option so far as it relates to the excess.

(4)Where the grant of two or more options at the same time causes that limit to be exceeded, then, for the purpose of determining which part of each option relates to that excess, the amount of the excess shall be divided pro rata among the options according to the value of the shares in respect of which each option was granted.

(5)Sub-paragraphs (7) and (8) of paragraph 10 (determination of value of shares) apply for the purposes of this paragraph as they apply for the purposes of that paragraph.

Income tax: option to acquire shares at less than market value

7In paragraph 45 (income tax charge on exercise of option to acquire shares at less than market value), for sub-paragraphs (2) to (4) substitute—

(2)In that case for the purposes of section 135 of the Taxes Act 1988 (taxation of share options) the amount of the gain realised by the exercise of the option is taken to be the amount by which—

(a)the chargeable market value, exceeds

(b)the aggregate of—

(i)the amount or value of the consideration given for the grant of the option, and

(ii)the amount for which the shares are acquired.

(3)For the purposes of this paragraph “the chargeable market value” means—

(a)the market value of the shares—

(i)at the time the option was granted, or

(ii)if it is a replacement value, at the time the original option was granted,

or

(b)if lower, the market value of the shares at the time the option is exercised.

(4)If the chargeable market value does not exceed the aggregate of the amounts mentioned in sub-paragraph (2)(b)(i) and (ii), no amount is chargeable to income tax under section 135 of the Taxes Act 1988 (taxation of share options) in respect of the exercise of the option.

Income tax: option to acquire shares at nil cost

8In paragraph 46 (income tax charge on exercise of option to acquire shares at nil cost), for sub-paragraph (2) substitute—

(2)In that case for the purposes of section 135 of the Taxes Act 1988 (taxation of share options) the amount of the gain realised by the exercise of the option is taken to be the amount by which—

(a)the chargeable market value (within the meaning of paragraph 45), exceeds

(b)the amount or value of the consideration given for the grant of the option.

(2A)If the chargeable market value does not exceed the amount or value of the consideration given for the grant of the option, no amount is chargeable to income tax under section 135 of the Taxes Act 1988 (taxation of share options) in respect of the exercise of the option.

Disqualifying events: alteration of share capital

9In paragraph 47 (main disqualifying events), for sub-paragraph (1)(e) substitute—

(e)any alteration to the share capital of the relevant company that is within paragraph 49(1)—

(i)where the effect of the alteration is that the requirements of this Schedule would no longer be met in relation to the option, or

(ii)where the effect of the alteration is to increase the market value of the shares that are the subject of the qualifying option and paragraph 49(2) applies to the alteration;.

10(1)Paragraph 49 (disqualifying events: alterations of share capital) is amended as follows.

(2)In sub-paragraph (1) for “this paragraph” substitute “this sub-paragraph”.

(3)For sub-paragraphs (2) to (5) (provision for approval of alteration by Inland Revenue) substitute—

(2)This sub-paragraph applies to an alteration if—

(a)it is not made by the relevant company for commercial reasons, or

(b)the main purpose or one of the main purposes for making the alteration is to increase the market value of the shares which are the subject of the qualifying option.

Income tax charge arising on disqualifying event

11(1)Paragraph 53 (effect of disqualifying event) is amended as follows.

(2)For sub-paragraph (2) substitute—

(2)Where paragraph 44 applies (option to acquire shares at market value), then for the purposes of section 135 of the Taxes Act 1988 (taxation of share options) the amount of the gain realised on the exercise of the option is taken to be—

(a)the post-event gain (if any), less

(b)the amount or value of the consideration given for the grant of the option.

(2A)Where paragraph 45 applies (option to acquire shares at less than market value), then for the purposes of section 135 of the Taxes Act 1988 (taxation of share options) the amount of the gain realised on the exercise of the option is taken to be—

(a)the aggregate of—

(i)the chargeable market value (within the meaning of that paragraph), and

(ii)the post-event gain, less

(b)the aggregate of—

(i)the amount or value of the consideration given for the grant of the option, and

(ii)the amount for which the shares are acquired.

(2B)Where paragraph 46 applies (option to acquire shares at nil cost), then for the purposes of section 135 of the Taxes Act 1988 (taxation of share options) the amount of the gain realised on the exercise of the option is taken to be—

(a)the aggregate of—

(i)the chargeable market value (within the meaning of paragraph 45), and

(ii)the post-event gain, less

(b)the amount or value of the consideration given for the grant of the option.

(2C)For the purposes of this paragraph “the post-event gain” means the amount (if any) by which—

(a)the market value of the shares when the option is exercised, exceeds

(b)their market value immediately before the disqualifying event.

(2D)Where—

(a)the amount of the gain realised on the exercise of an option falls to be determined under sub-paragraph (2), (2A) or (2B) above, and

(b)the amount mentioned in paragraph (b) of the sub-paragraph concerned exceeds the amount mentioned in paragraph (a) of that sub-paragraph,

no amount is chargeable to income tax under section 135 of the Taxes Act 1988 (taxation of share options) in respect of the exercise of the option.

(3)In sub-paragraph (3) for “sub-paragraph (2)” substitute “sub-paragraphs (2), (2A) and (2B)”.

Qualifying requirements for replacement option

12In paragraph 63 (qualifying requirements for replacement option), in paragraph (b)(ii) for “(number of employees who may hold qualifying options)” substitute “(maximum value of options in respect of relevant company’s shares)”.

Commencement

13(1)The amendments made by paragraphs 2 to 6 and 12 have effect in relation to any right to acquire shares granted after the passing of this Act.

(2)The amendments made by paragraphs 7, 8 and 11 have effect in relation to any right to acquire shares exercised after the passing of this Act.

(3)The amendments made by paragraphs 9 and 10 have effect in relation to any alteration made to the share capital of a company after the passing of this Act.

Section 63.

SCHEDULE 15Enterprise investment scheme: amendments

Part 1Income tax relief

Introductory

1Chapter 3 of Part 7 of the Taxes Act 1988 is amended in accordance with this Part.

Oil activities

2In section 289 (eligibility for income tax relief)—

(a)in subsection (1C) (meaning of “the active company”) for “, research and development or oil exploration” substitute “or research and development”,

(b)in subsection (2)—

(i)at the end of paragraph (a) insert “or”, and

(ii)omit paragraph (c) (which relates to the treatment of oil exploration as a qualifying business activity), and

(c)omit subsections (4) and (5) (which make provision supplemental to section 289(2)(c)).

3In section 289A (form of relief), in subsection (7) (which specifies conditions to be satisfied before a claim for relief is allowed)—

(a)after paragraph (a) insert “and”, and

(b)omit paragraph (c) (condition to be satisfied in a case involving oil exploration).

4In section 293 (qualifying company), in subsection (3B)(b) omit “and oil exploration”.

5In section 297 (qualifying trades) omit—

(a)subsection (2)(d) (oil extraction activities not to amount to substantial part of the trade); and

(b)subsection (9) (oil extraction activities treated as qualifying trade for purposes of section 289(2)(c)).

Requirement as to the money raised

6In section 289 (eligibility for relief)—

(a)in subsection (1) (conditions of eligibility for income tax relief), for paragraph (c) (requirement that all of the money raised is employed for purposes of qualifying business activity within prescribed period) substitute—

(c)at least 80% of the money raised by the issue mentioned in paragraph (b) above is employed wholly for the purpose of the activity mentioned in that paragraph not later than the time mentioned in subsection (3) below, and

(d)all of the money so raised is employed wholly for that purpose not later than 12 months after that time., and

(b)in subsection (3) for “condition in subsection (1)(c) above does” substitute “conditions in subsection (1)(c) and (d) above do”.

7In section 307 (withdrawal of relief)—

(a)in subsection (1A) for “section 289(1)(b), (ba) or (c)” substitute “section 289(1)(b), (ba), (c) or (d)”, and

(b)in subsection (6)(aa) for “section 289(1)(c)” substitute “section 289(1)(c) or (d)”.

8In section 310 (information), in subsection (2) for “289(1)(ba) or (c)” substitute “289(1)(ba), (c) or (d)”.

Repayment supplements

9(1)In section 289A (form of relief), omit subsection (9) (modification of provisions relating to repayment supplements where effect given to claim for relief by repayment of tax).

(2)The amendment made by this paragraph has effect in relation to repayments of tax on or after 7th March 2001.

Designated period

10In section 291 (individuals qualifying for relief), for subsection (1)(b) (requirement that individual is not connected with the issuing company at any time in the designated period) substitute—

(b)subject to section 291A(4), he is not at any time in the period—

(i)beginning two years before the issue of the shares, and

(ii)ending immediately before the termination date relating to those shares,

connected with the company (whether before or after its incorporation)..

11In section 291A (connected persons: directors), in subsection (1)(a) for “the designated period” substitute “the period mentioned in section 291(1)(b)”.

Unquoted company requirement

12(1)In section 293 (qualifying companies), after subsection (1) insert—

(1A)At the beginning of the relevant period, the company must be—

(a)an unquoted company, and

(b)a company to which subsection (1B) below does not apply.

(1B)This subsection applies to a company—

(a)if arrangements are in existence for it to cease to be an unquoted company; or

(b)if—

(i)arrangements are in existence for it to become a subsidiary of another company (“the new company”) by virtue of an exchange of shares, or shares and securities, in relation to which section 304A (certain exchanges resulting in acquisition of share capital by new company) applies, and

(ii)arrangements have been made with a view to the new company ceasing to be an unquoted company..

(2)In subsection (2) of that section (requirement that, throughout the relevant period, the company is an unquoted company etc.) omit “be an unquoted company and”.

13In section 312 (interpretation), in subsection (1E) (unquoted company status not lost by reason of subsequent designation, by order, of stock exchange or means of dealing)—

(a)after “are issued” insert “(“the relevant time”)”, and

(b)for the words “listed” to the end substitute—

(a)listed on a stock exchange that is a recognised stock exchange by virtue of an order made under section 841, or

(b)listed on an exchange, or dealt in by any means, designated by an order made for the purposes of subsection (1B) above,

if the order was made after the relevant time..

Royalties and licence fees

14(1)In relation to shares issued on or after 6th April 2000, section 293 (qualifying companies) has effect, and shall be deemed always to have had effect, with the following amendment.

(2)In subsection (3C) for “the requirements mentioned in paragraphs (a) and (b) of section 297(4) or (5) are” substitute “the requirement mentioned in section 297(4) is”.

Value received by individual etc.

15(1)In section 300 (value received from company etc.), in subsection (1) after “value” insert “(other than insignificant value)”.

(2)In that subsection for “designated period” substitute “period of restriction”.

(3)After subsection (1A) of that section insert—

(1AA)This section is subject to section 300A..

(4)After subsection (1B) of that section insert—

(1BA)Where—

(a)an individual subscribes for two or more issues of eligible shares in a company, being issues comprising shares in respect of which the individual obtains relief, and

(b)the individual receives any value from the company at any time in the periods of restriction relating to the shares comprised in two or more of those issues,

this section has effect in relation to the shares comprised in each of the issues referred to in paragraph (b) above as if the amount of the value received were reduced by multiplying it by the fraction specified in subsection (1BB) below.

(1BB)The fraction is—

Formula - A divided by B

where—

  • A is the amount subscribed by the individual for the eligible shares comprised in the issue in question, and

  • B is the aggregate of that amount and the corresponding amount or amounts for eligible shares comprised in the other issue or issues.

(1BC)Where—

(a)an individual who subscribes for eligible shares in a company receives value (“the relevant receipt”) from the company during the period of restriction,

(b)the individual has received from the company one or more receipts of insignificant value at a time or times—

(i)during that period, but

(ii)not later than the time of the relevant receipt, and

(c)the aggregate amount of the value of the receipts within paragraphs (a) and (b) above is not an amount of insignificant value,

the individual shall be treated for the purposes of this Chapter as if the relevant receipt had been a receipt of an amount of value equal to the aggregate amount.

For this purpose a receipt does not fall within paragraph (b) above if it has previously been aggregated under this subsection..

(5)In subsection (1C) of that section for the words from “References” to “include references” substitute “Any reference in subsection (1), (1BA) or (1BC) above to the receipt of value (however expressed) from a company includes a reference”.

(6)In subsections (4)(a) and (5) of that section for “receivable” substitute “received”.

16After section 300 insert—

300AReceipt of replacement value

(1)Where—

(a)any relief attributable to any eligible shares comprised in an issue of shares subscribed for by an individual (“the individual”) would, in the absence of this section, be reduced or withdrawn under section 300 by reason of a receipt of value within subsection (2) or (5) of that section (“the original value”),

(b)the original supplier receives value (“the replacement value”) from the original recipient by virtue of a qualifying receipt, and

(c)the amount of the replacement value is not less than the amount of the original value,

the receipt of the original value shall be disregarded for the purposes of section 300.

This is subject to subsections (7) and (8) below.

(2)For the purposes of this section—

  • “the original recipient” means the person who receives the original value, and

  • “the original supplier” means the person from whom that value was received.

(3)Where the amount of the original value is, by virtue of subsection (1BA) of section 300, treated as reduced for the purposes of that section as it applies in relation to the eligible shares in question, the reference in subsection (1)(c) above to the amount of the original value shall be read as a reference to the amount of that value disregarding the reduction.

(4)A receipt of the replacement value is a qualifying receipt for the purposes of subsection (1) above if it arises—

(a)by reason of the original recipient doing one or more of the following—

(i)making a payment to the original supplier, other than a payment which falls within paragraph (c) below or to which subsection (5) below applies;

(ii)acquiring any asset from the original supplier for a consideration the amount or value of which is more than the market value of the asset;

(iii)disposing of any asset to the original supplier for no consideration or for a consideration the amount or value of which is less than the market value of the asset;

(b)where the receipt of the original value was within section 300(2)(d), by reason of an event the effect of which is to reverse the event which constituted the receipt of the original value; or

(c)where the receipt of the original value was within section 300(5), by reason of the original recipient repurchasing the share capital or securities in question, or (as the case may be) reacquiring the right in question, for a consideration the amount or value of which is not less than the amount of the original value.

(5)This subsection applies to—

(a)any payment for any goods, services or facilities, provided (whether in the course of a trade or otherwise) by—

(i)the original supplier, or

(ii)any other person who, at any time in the period of restriction, is an associate of, or connected with, that supplier (whether or not he is such an associate, or so connected, at the material time),

which is reasonable in relation to the market value of those goods, services or facilities;

(b)any payment of any interest which represents no more than a reasonable commercial return on money lent to—

(i)the original recipient, or

(ii)any person who, at any time in the period of restriction, is an associate of his (whether or not he is such an associate at the material time);

(c)any payment for the acquisition of an asset which does not exceed its market value;

(d)any payment, as rent for any property occupied by—

(i)the original recipient, or

(ii)any person who, at any time in the period of restriction, is an associate of his (whether or not he is such an associate at the material time),

of an amount not exceeding a reasonable and commercial rent for the property;

(e)any payment in discharge of an ordinary trade debt; and

(f)any payment for shares in or securities of any company in circumstances that do not fall within subsection (4)(a)(ii) above.

(6)For the purposes of this section, the amount of the replacement value is—

(a)in a case within paragraph (a) of subsection (4) above, the aggregate of—

(i)the amount of any payment within sub-paragraph (i) of that paragraph, and

(ii)the difference between the market value of any asset to which sub-paragraph (ii) or (iii) of that paragraph applies and the amount or value of the consideration (if any) received for it,

(b)in a case within subsection (4)(b) above, the same as the amount of the original value, and

(c)in a case within subsection (4)(c) above, the amount or value of the consideration received by the original supplier,

and section 300(4) and (5) shall apply for the purposes of determining the amount of the original value.

(7)The receipt of the replacement value by the original supplier shall be disregarded for the purposes of this section, as it applies in relation to the eligible shares, to the extent to which that receipt has previously been set (under this section) against any receipts of value which are, in consequence, disregarded for the purposes of section 300 as that section applies in relation to those shares or any other shares subscribed for by the individual.

(8)The receipt of the replacement value by the original supplier (“the event”) shall be disregarded for the purposes of this section if—

(a)the event occurs before the start of the period of restriction, or

(b)in a case where the event occurs after the time the original recipient receives the original value, it does not occur as soon after that time as is reasonably practicable in the circumstances, or

(c)where an appeal has been brought by the individual against an assessment to withdraw or reduce any relief attributable to the eligible shares by reason of the receipt of the original value, the event occurs more than 60 days after the amount of relief which falls to be withdrawn has been finally determined.

But nothing in this section requires the replacement value to be received after the original value.

(9)Subsection (10) below applies where—

(a)the receipt of the replacement value by the original supplier is a qualifying receipt (for the purposes of subsection (1) above) in consequence of which any receipts of value are disregarded for the purposes of section 300 as that section applies in relation to the shares in question or any other shares subscribed for by the individual in question, and

(b)the event which gives rise to the receipt is (or includes) a subscription for shares by—

(i)the individual, or

(ii)any person who, at any time in the period of restriction, is an associate of his, whether or not he is such an associate at the material time.

(10)Where this subsection applies, the person who subscribes for the shares as mentioned in subsection (9)(b) above shall not—

(a)be eligible for any relief under this Chapter in relation to those shares or any other shares in the same issue, or

(b)by virtue of his subscription for those shares or any other shares in the same issue, be treated as making a qualifying investment for the purposes of Schedule 5B to the 1992 Act (enterprise investment scheme: reinvestment).

(11)In this section—

(a)any reference to a payment to a person (however expressed) includes a reference to a payment made to him indirectly or to his order or for his benefit, and

(b)references to “the period of restriction” are to the period of restriction relating to the shares mentioned in subsection (1)(a) above..

17In section 301 (provisions supplementary to section 300), in subsections (4A) and (5) for “section 300” substitute “sections 300 and 300A”.

18After that section insert—

301AReceipts of insignificant value: supplementary provision

(1)In this section and section 300 references to a receipt of insignificant value (however expressed) are references to a receipt of an amount of insignificant value.

This is subject to subsection (3) below.

(2)For the purposes of this section and section 300 “an amount of insignificant value” means an amount of value which—

(a)does not exceed £1,000, or

(b)if it exceeds that amount, is insignificant in relation to the amount subscribed by the individual in question for the eligible shares in question.

(3)For the purposes of section 300, if, at any time in the period—

(a)beginning one year before the eligible shares in question are issued, and

(b)expiring at the end of the issue date,

arrangements are in existence which provide for the individual in question to receive or to be entitled to receive, at any time in the period of restriction relating to those shares, any value from the company that issued those shares, no amount of value received by the individual shall be treated as a receipt of insignificant value.

(4)For the purposes of this section—

(a)references to the individual include references to any person who, at any time in the period of restriction relating to the shares in question, is an associate of his (whether or not he is such an associate at the material time), and

(b)the reference in subsection (3) above to the company includes a reference to any person who, at any time in the period of restriction relating to the shares in question, is connected with the company (whether or not that person is so connected at the material time).

(5)For the purposes of this section, 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..

Repayment of share capital

19(1)In section 303 (repayment of share capital), in subsection (1) for “designated period” substitute “period of restriction”.

(2)In subsection (1AA) of that section for “section 303A” substitute “sections 303AA and 303A”.

(3)In subsection (1B) of that section (receipts of value which do not result in the withdrawal or reduction of income tax relief)—

(a)in paragraph (c) after “relief” insert “attributable to shares held by that person”, and

(b)after paragraph (c) insert—

or it would have the effect mentioned in paragraph (a), (b) or (c) above were it not a receipt of insignificant value for the purposes of section 300 above, paragraph 13 of Schedule 5B to the 1992 Act or paragraph 47 of the Finance Act 2000, as the case may be.

(4)In subsection (1C) of that section, in paragraph (a) for “receivable” substitute “received”.

(5)In subsection (2A) of that section, for paragraph (b) substitute—

(b)if the shares were issued on or after 6th April 2000 but before 7th March 2001, the period beginning two years before the issue of the shares and ending immediately before the termination date relating to those shares,

(c)in any other case, the period of restriction for the issue..

(6)Omit subsections (3) to (7) of that section (determination of whether a person is connected with the issuing company in case where member of company receives value from it).

(7)In subsection (9A) of that section after “this section” insert “and section 303AA”.

20After section 303 insert—

303AAInsignificant repayments disregarded for purposes of s.303(1)

(1)Any repayment shall be disregarded for the purposes of section 303(1) (repayments etc. which cause withdrawal or reduction of relief) if whichever is the greater of—

(a)the market value of the shares to which it relates (“the target shares”) immediately before the event occurs, and

(b)the amount received by the member in question,

is insignificant in relation to the market value of the remaining issued share capital of the company in question (or, as the case may be, subsidiary in question) immediately after the event occurs.

This is subject to subsection (4) below.

(2)For the purposes of this section “repayment” means a repayment, redemption, repurchase or payment mentioned in section 303(1) (repayments etc. which cause withdrawal or reduction of relief).

(3)For the purposes of subsection (1) above it shall be assumed that the target shares are cancelled at the time the repayment is made.

(4)Where an individual subscribes for eligible shares in a company, subsection (1) above does not apply to prevent section 303(1) having effect in relation to those shares if, at a relevant time, arrangements are in existence that provide—

(a)for a repayment by the company or any subsidiary of the company (whether or not it is such a subsidiary at the time the arrangements are made), or

(b)for anyone to be entitled to such a repayment,

at any time in the period of restriction relating to those shares.

(5)For the purposes of subsection (4) above “a relevant time” means any time in the period—

(a)beginning one year before the eligible shares were issued, and

(b)expiring at the end of the issue date..

21In section 303A (restriction on withdrawal or reduction of relief under section 303)—

(a)for subsection (2) substitute—

(2)For the purposes of this section “repayment” has the meaning given in section 303AA(2) above.,

(b)omit subsection (8) (repayments treated, for the purposes of the corporate venturing scheme, as causing insignificant changes to share capital to be disregarded), and

(c)in subsection (9)(a) for “that Schedule” substitute “Schedule 15 to the Finance Act 2000 (corporate venturing scheme)”.

Claims

22(1)In section 306(1) (timing of claim for relief), for paragraph (a) substitute—

(a)not earlier than the time the requirement in section 289A(6) is first satisfied; and.

(2)The amendment made by this paragraph has effect in relation to shares issued on or after 6th April 2001.

Information

23(1)In section 310 (information), in subsection (1) (claimant required to give notice of events by reason of which relief falls to be withdrawn or reduced), after “300,” insert “or would fall to be withdrawn under section 300 were it not for the application of section 300A,”.

(2)In subsection (2) of that section (company etc. required to give notice of events by reason of which relief falls to be withdrawn or reduced), after “303” insert “, or would fall to be withdrawn under section 300 were it not for the application of section 300A,”.

(3)After that subsection insert—

(2A)Where—

(a)a person is required to give notice under subsection (1) or (2) above of an event by reason of which any relief in respect of any shares in a company—

(i)falls to be withdrawn under section 300, or

(ii)would fall to be so withdrawn were it not for the application of section 300A, and

(b)that person has knowledge of the replacement value received (or expected to be received) from the original recipient by the original supplier by reason of a qualifying receipt,

the notice shall include particulars of that receipt of the replacement value (or expected receipt).

In this subsection “the replacement value”, “the original recipient”, “the original supplier” and “qualifying receipt” shall be construed in accordance with section 300A..

(4)In subsection (4) of that section, after “believe” insert “(a)” and for “the inspector may” (where it first occurs) substitute— , or

(b)that a person has given or received value (within the meaning of section 300(2) or (5)) which, but for the fact that the amount given or received was an amount of insignificant value (within the meaning of section 301A(2)), would have triggered a requirement to give a notice under subsection (1) or (2) above, or

(c)that a person has made or received any repayment (within the meaning of section 303AA(2)) which, but for the fact that it falls to be disregarded for the purposes of section 303(1) by virtue of section 303AA(1), would have triggered a requirement to give a notice under subsection (2) above,

the inspector may.

(5)The amendments made by this paragraph have effect in relation to events occurring on or after 7th March 2001.

Interpretation

24In section 312 (interpretation), in subsection (1), after the definition of “ordinary shares” insert—

“the period of restriction”, in relation to any eligible shares issued by a company, means the period—

(a)beginning one year before the shares are issued, and

(b)ending immediately before the termination date relating to the shares;.

Part 2Postponement of chargeable gain on reinvestment

Introductory

25Schedule 5B to the Taxation of Chargeable Gains Act 1992 (c. 12) is amended in accordance with this Part.

Requirement as to the money raised

26In paragraph 1 (eligibility for relief), in sub-paragraph (2) (qualifying investment)—

(a)for paragraph (g) substitute—

(g)at least 80% of the money raised by the issue is employed wholly for the purpose of that activity not later than the time mentioned in section 289(3) of the Taxes Act, and

(h)all of the money so raised is employed wholly for that purpose not later than 12 months after that time,;

and

(b)in the full-out words at the end for “condition in paragraph (g) above does” substitute “conditions in paragraphs (g) and (h) above do”.

27(1)In paragraph 1A (failure of conditions of application), in sub-paragraph (4)—

(a)after “(2)(g)” insert “or (h)”; and

(b)in paragraph (a) for “section 289(3) of the Taxes Act” substitute “sub-paragraph (4A) below”.

(2)After that sub-paragraph insert—

(4A)The time referred to in sub-paragraph (4) above is—

(a)in a case relating to the condition in sub-paragraph (2)(g) of paragraph 1 above, the time mentioned in section 289(3) of the Taxes Act, and

(b)in a case relating to the condition in sub-paragraph (2)(h) of that paragraph, the time 12 months after that time..

28In paragraph 16 (information), after sub-paragraph (4) insert—

(4A)Sub-paragraph (4) above shall apply in relation to the condition in paragraph 1(2)(h) above as it applies in relation to the condition in paragraph 1(2)(g) above, except that the reference to the time mentioned in section 289(3) of the Taxes Act shall be read as a reference to the time 12 months after that time..

Designated period

29In paragraph 3(1) (chargeable events) in both paragraph (c) and paragraph (d) for “within the designated period” substitute “before the termination date relating to those shares”.

Value received by investor

30(1)In paragraph 13 (value received by investor) in sub-paragraph (1) after “any value” insert “(other than insignificant value)”.

(2)In that sub-paragraph for “designated period” substitute “period of restriction”.

(3)After that sub-paragraph insert—

(1A)This paragraph is subject to paragraph 13B below.

(1B)Where—

(a)the individual who subscribes for the shares receives value (“the relevant receipt”) from the company during the period of restriction,

(b)the individual has received from the company one or more receipts of insignificant value at a time or times—

(i)during that period, but

(ii)not later than the time of the relevant receipt, and

(c)the aggregate amount of the value of the receipts within paragraphs (a) and (b) above is not an amount of insignificant value,

the individual shall be treated for the purposes of this Schedule as if the relevant receipt had been a receipt of an amount of value equal to the aggregate amount.

For this purpose a receipt does not fall within paragraph (b) above if it has previously been aggregated under this sub-paragraph..

(4)Omit sub-paragraph (4) of that paragraph (certain payments etc. received on a winding up or dissolution treated as receipts of value).

(5)In sub-paragraph (10) of that paragraph (interpretation of provisions applying to paragraph 13) after “this paragraph” insert “and paragraph 13A(1) below”.

(6)After sub-paragraph (11) of that paragraph insert—

(12)In paragraphs 13A to 13C below (except paragraph 13C(4))—

(a)references to “the shares” shall be construed in accordance with sub-paragraph (1) above, and

(b)references to “the period of restriction” shall be construed as references to the period of restriction relating to the shares..

31After paragraph 13 insert—

Provision supplemental to paragraph 13

13A(1)For the purposes of paragraph 13 above, the value received by the individual in question is—

(a)in a case within sub-paragraph (2)(a), (b) or (c) of that paragraph, the amount received by the individual or, if greater, the market value of the share capital, securities or debt in question;

(b)in a case within sub-paragraph (2)(d) of that paragraph, the amount of the liability;

(c)in a case within sub-paragraph (2)(e) of that paragraph, the amount of the loan or advance reduced by the amount of any repayment made before the issue of the shares;

(d)in a case within sub-paragraph (2)(f) of that paragraph, the cost to the company of providing the benefit or facility less any consideration given for it by the individual;

(e)in a case within sub-paragraph (2)(g) or (h) of that paragraph, the difference between the market value of the asset and the consideration (if any) given for it;

(f)in a case within sub-paragraph (2)(i) of that paragraph, the amount of the payment;

(g)in a case within sub-paragraph (5) of that paragraph, the amount received by the individual or, if greater, the market value of the share capital or securities in question.

(2)In this paragraph and paragraph 13 above references to a receipt of insignificant value (however expressed) are references to a receipt of an amount of insignificant value.

This is subject to sub-paragraph (4) below.

(3)For the purposes of this paragraph and paragraph 13 above “an amount of insignificant value” means an amount of value which—

(a)does not exceed £1,000, or

(b)if it exceeds that amount, is insignificant in relation to the total amount of expenditure on the shares which is set under this Schedule against a corresponding total amount of the whole or any part of any chargeable gains.

(4)For the purposes of paragraph 13 above, if, at any time in the period—

(a)beginning one year before the shares are issued, and

(b)expiring at the end of the issue date,

arrangements are in existence which provide for the individual who subscribes for the shares to receive or to be entitled to receive, at any time in the period of restriction, any value from the company that issued the shares, no amount of value received by the individual shall be treated as a receipt of insignificant value.

(5)In sub-paragraph (4) above—

(a)any reference to the individual includes a reference to any person who, at any time in the period of restriction, is an associate of his (whether or not he is such an associate at the material time), and

(b)the reference to the company includes a reference to any person who, at any time in the period of restriction, is connected with the company (whether or not that person is so connected at the material time).

Receipt of replacement value

13B(1)Where—

(a)by reason of a receipt of value within sub-paragraph (2) (other than paragraph (b)) or sub-paragraph (5) of paragraph 13 above (“the original value”), the shares would, in the absence of this paragraph, be treated as never having been eligible shares or as ceasing to be eligible shares on the date when the value is received,

(b)the original supplier receives value (“the replacement value”) from the original recipient by reason of a qualifying receipt, and

(c)the amount of the replacement value is not less than the amount of the original value,

the receipt of the original value shall be disregarded for the purposes of paragraph 13 above.

(2)This paragraph is subject to paragraph 13C below.

(3)For the purposes of this paragraph and paragraph 13C below—

  • “the original recipient” means the person who receives the original value, and

  • “the original supplier” means the person from whom that value was received.

(4)A receipt of the replacement value is a qualifying receipt for the purposes of sub-paragraph (1) above if it arises—

(a)by reason of the original recipient doing one or more of the following—

(i)making a payment to the original supplier, other than a payment which falls within paragraph (c) below or to which sub-paragraph (5) below applies;

(ii)acquiring any asset from the original supplier for a consideration the amount or value of which is more than the market value of the asset;

(iii)disposing of any asset to the original supplier for no consideration or for a consideration the amount or value of which is less than the market value of the asset;

(b)where the receipt of the original value was within paragraph 13(2)(d) above, by reason of an event the effect of which is to reverse the event which constituted the receipt of the original value; or

(c)where the receipt of the original value was within paragraph 13(5) above, by reason of the original recipient repurchasing the share capital or securities in question, or (as the case may be) reacquiring the right in question, for a consideration the amount or value of which is not less than the amount of the original value.

(5)This sub-paragraph applies to—

(a)any payment for any goods, services or facilities, provided (whether in the course of a trade or otherwise) by—

(i)the original supplier, or

(ii)any other person who, at any time in the period of restriction, is an associate of, or connected with, that supplier (whether or not that person is such an associate, or so connected, at the material time),

which is reasonable in relation to the market value of those goods, services or facilities;

(b)any payment of any interest which represents no more than a reasonable commercial return on money lent to—

(i)the original recipient, or

(ii)any person who, at any time in the period of restriction, is an associate of his (whether or not he is such an associate at the material time);

(c)any payment for the acquisition of an asset which does not exceed its market value;

(d)any payment, as rent for any property occupied by—

(i)the original recipient, or

(ii)any person who, at any time in the period of restriction, is an associate of his (whether or not he is such an associate at the material time),

of an amount not exceeding a reasonable and commercial rent for the property;

(e)any payment in discharge of an ordinary trade debt (within the meaning of paragraph 13(11) above); and

(f)any payment for shares in or securities of any company in circumstances that do not fall within sub-paragraph (4)(a)(ii) above.

(6)For the purposes of this paragraph, the amount of the replacement value is—

(a)in a case within paragraph (a) of sub-paragraph (4) above, the aggregate of—

(i)the amount of any payment within sub-paragraph (i) of that paragraph, and

(ii)the difference between the market value of any asset within sub-paragraph (ii) or (iii) of that paragraph and the amount or value of the consideration (if any) received for it,

(b)in a case within sub-paragraph (4)(b) above, the same as the amount of the original value, and

(c)in a case within sub-paragraph (4)(c) above, the amount or value of the consideration received by the original supplier,

and paragraph 13A(1) above applies for the purposes of determining the amount of the original value.

(7)In this paragraph any reference to a payment to a person (however expressed) includes a reference to a payment made to him indirectly or to his order or for his benefit.

Provision supplemental to paragraph 13B

13C(1)The receipt of the replacement value by the original supplier shall be disregarded for the purposes of paragraph 13B above, as it applies in relation to the shares, to the extent to which that receipt has previously been set (under that paragraph) against any receipts of value which are, in consequence, disregarded for the purposes of paragraph 13 above as that paragraph applies in relation to those shares or any other shares subscribed for by the individual in question (“the individual”).

(2)The receipt of the replacement value by the original supplier (“the event”) shall also be disregarded for the purposes of paragraph 13B above if—

(a)the event occurs before the start of the period of restriction, or

(b)in a case where the event occurs after the time the original recipient receives the original value, it does not occur as soon after that time as is reasonably practicable in the circumstances, or

(c)where an appeal has been brought by the individual against an assessment made by virtue of paragraph 3(1)(e) above by reason of that receipt, the event occurs more than 60 days after the appeal has been finally determined.

But nothing in paragraph 13B above or this paragraph requires the replacement value to be received after the original value.

(3)Sub-paragraph (4) below applies where—

(a)the receipt of the replacement value by the original supplier is a qualifying receipt for the purposes of paragraph 13B(1) above, and

(b)the event which gives rise to the receipt is (or includes) a subscription for shares by—

(i)the individual, or

(ii)any person who, at any time in the period of restriction, is an associate of the individual, whether or not he is such an associate at the material time.

(4)Where this sub-paragraph applies, the person who subscribes for the shares shall not—

(a)be eligible for any relief under Chapter 3 of Part 7 of the Taxes Act (enterprise investment scheme: income tax relief) in relation to those shares or any other shares in the same issue, or

(b)by virtue of his subscription for those shares or any other shares in the same issue, be treated as making a qualifying investment for the purposes of this Schedule.

(5)In this paragraph “the original value” and “the replacement value” shall be construed in accordance with paragraph 13B above..

Value received by persons other than the investor

32(1)In paragraph 14 (value received by persons other than the investor), in sub-paragraph (1)—

(a)for “designated period” substitute “period of restriction”, and

(b)for “paragraph 14A” substitute “paragraphs 14AA and 14A”.

(2)In sub-paragraph (3) of that paragraph (repayments etc. excluded from the effects of paragraph 13(1))—

(a)in paragraph (c) after “relief” insert “attributable to shares held by that person”, and

(b)after paragraph (c) insert—

or it would have the effect mentioned in paragraph (a), (b) or (c) above were it not a receipt of insignificant value for the purposes of paragraph 13 above, section 300 of the Taxes Act or paragraph 47 of Schedule 15 to the Finance Act 2000, as the case may be.

(3)In sub-paragraph (7) of that paragraph (meaning of “subsidiary” in paragraph 14) after “this paragraph” insert “and paragraph 14AA below”.

Certain receipts to be disregarded

33After paragraph 14 insert—

Insignificant repayments disregarded for purposes of paragraph 14

14AA(1)Any repayment shall be disregarded for the purposes of paragraph 14 above if whichever is the greater of—

(a)the market value of the shares to which it relates (“the target shares”) immediately before the event occurs, and

(b)the amount received by the member in question,

is insignificant in relation to the market value of the remaining issued share capital of the company in question (or, as the case may be, subsidiary in question) immediately after the event occurs.

This is subject to sub-paragraph (4) below.

(2)For the purposes of this paragraph “repayment” means a repayment, redemption, repurchase or payment mentioned in paragraph 14(1) above.

(3)For the purposes of sub-paragraph (1) above it shall be assumed that the target shares are cancelled at the time the repayment is made.

(4)Where an individual subscribes for eligible shares in a company, sub-paragraph (1) above does not apply to prevent paragraph 14(2) above having effect in relation to the shares if, at a relevant time, arrangements are in existence that provide—

(a)for a repayment by the company or any subsidiary of the company (whether or not it is such a subsidiary at the time the arrangements are made), or

(b)for anyone to be entitled to such a repayment,

at any time in the period of restriction.

(5)For the purposes of sub-paragraph (4) above “a relevant time” means any time in the period—

(a)beginning one year before the eligible shares were issued, and

(b)expiring at the end of the issue date..

34In paragraph 14A (certain receipts to be disregarded for purposes of paragraph 14)—

(a)for sub-paragraph (2) substitute—

(2)For the purposes of this paragraph “repayment” has the meaning given in paragraph 14AA(2) above.,

(b)omit sub-paragraph (7) (repayments treated, for the purposes of the corporate venturing scheme, as causing insignificant changes to share capital to be disregarded), and

(c)in sub-paragraph (8)(a) for “that Schedule” substitute “Schedule 15 to the Finance Act 2000 (corporate venturing scheme)”.

Information

35(1)In paragraph 16 (information), in sub-paragraph (1)(a) for “in the designated period” substitute “before the termination date relating to those shares”.

(2)After sub-paragraph (2) of that paragraph insert—

(2A)In determining, for the purposes of sub-paragraph (1) or (2) above, whether a chargeable event falling within paragraph 3(1)(e) above has occurred by virtue of paragraph 13(1)(b) above, the effect of paragraph 13B above shall be disregarded..

(3)After sub-paragraph (3) of that paragraph insert—

(3A)Where—

(a)a person is required to give a notice under sub-paragraph (1) or (2) above in respect of a chargeable event which occurs by virtue of paragraph 13(1)(b) above or would occur by virtue of that paragraph but for the operation of paragraph 13B above, and

(b)that person has knowledge of the replacement value received (or expected to be received) from the original recipient by the original supplier by reason of a qualifying receipt,

the notice shall include particulars of that receipt of the replacement value (or expected receipt).

In this sub-paragraph “the replacement value”, “the original recipient”, “the original supplier” and “qualifying receipt” shall be construed in accordance with paragraph 13B above..

(4)In sub-paragraph (5) of that paragraph, for “If” to “particular case,” substitute—

If the inspector has reason to believe—

(a)that a person has not given a notice which he is required to give—

(i)under sub-paragraph (1) or (2) above in respect of any chargeable event, or

(ii)under sub-paragraph (4) above in respect of any particular case, or

(b)that a person has given or received value (within the meaning of paragraph 13(2) or (5) above) which, but for the fact that the amount given or received was an amount of insignificant value (within the meaning of paragraph 13A(3) above), would have triggered a requirement to give a notice under sub-paragraph (1) or (2) above, or

(c)that a person has made or received any repayment (within the meaning of paragraph 14AA(2) above) which, but for the fact that it falls to be disregarded for the purposes of paragraph 14 above by virtue of paragraph 14AA(1) above, would have triggered a requirement to give a notice under sub-paragraph (2) above,.

(5)The amendments made by this paragraph have effect in relation to events occurring on or after 7th March 2001.

Trustees: anti-avoidance

36In paragraph 18 (trustees: anti-avoidance)—

(a)in sub-paragraph (1) after “13” insert “to 13C”, and

(b)in sub-paragraph (2)—

(i)in paragraph (a) for “paragraph 13 above applies” substitute “sub-paragraph (1) of paragraph 13 above applies, or that sub-paragraph would apply were it not for the fact that the amount of value is an amount of insignificant value for the purposes of that sub-paragraph”, and

(ii)after that paragraph insert—

(ab)in a case where paragraph 13(1) above would apply were it not for the operation of paragraph 13B above, the time when the original value (within the meaning of paragraph 13B above) in question is received;.

Interpretation

37In paragraph 19 (interpretation), in sub-paragraph (1)—

(a)after the definition of “ordinary shares” insert—

“the period of restriction”, in relation to any shares, means the period—

(a)beginning one year before the shares are issued, and

(b)ending immediately before the termination date relating to the shares;,

(b)in the definition of “qualifying company” after “Act” insert “ (except that for the purposes of this Schedule the reference in section 293(1B)(b)(i) of that Act to section 304A of that Act shall be read as a reference to paragraph 8 above)”, and

(c)at the end insert—

“termination date”, in relation to any shares, means the date found by applying the definition of “termination date” in section 312(1) of the Taxes Act by reference to the company that issued the shares and by reference to the shares..

Part 3Miscellaneous and general

Loss relief

38(1)Section 576 of the Taxes Act 1988 (supplementary provisions relating to relief for losses on shares in trading companies) is amended as follows.

(2)In subsection (4) (definition of “qualifying trading company”) omit the words from “at all times” to “and which”.

(3)In subsection (4A) (meaning of “eligible trading company” for purposes of subsection (4))—

(a)after paragraph (a) insert—

(ab)the reference in subsection (1A) of section 293 to the beginning of the relevant period were a reference to the time at which the shares in respect of which relief is claimed under section 573 or 574 were issued;,

(b)in paragraph (b) for the words from “and the condition” to the end substitute and after paragraph (a) of that subsection there were inserted—

(b)the company continues, during the winding up, to be a trading company within the meaning of section 576(5).;, and

(c)in paragraph (d) after “293” insert “(except subsection (1A))”.

(4)The amendment made by sub-paragraph (3)(b) has effect in relation to shares issued on or after 6th April 2001.

(5)The other amendments made by this paragraph have effect—

(a)in relation to shares issued on or after 7th March 2001, and

(b)in relation to shares issued after 5th April 1998 but before 7th March 2001, in respect of any part of the relevant period which falls on or after 7th March 2001.

(6)For the purposes of sub-paragraph (5)(b) “relevant period” has the meaning given in section 576(5) of the Taxes Act 1988.

Penalties in connection with returns etc.

39(1)In section 98 of the Taxes Management Act 1970 (c. 9), in the second column of the Table, in the entry for section 310(1), (2) and (3) of the Taxes Act 1988 after “(2)” insert “, (2A)”.

(2)This paragraph has effect in relation to shares issued on or after 6th April 2001, for claims for relief under Chapter 3 of Part 7 of the Taxes Act 1988 made for the year 2000-01 or any later year of assessment.

Commencement

40(1)Except where provision is made to the contrary, the amendments made by this Schedule have effect in accordance with the following provisions of this paragraph.

(2)The amendments made by paragraphs 2 to 8, 10 to 14, 24, 26 to 29 and 37 have effect—

(a)in relation to shares issued on or after 7th March 2001, and

(b)in respect of the application of Chapter 3 of Part 7 of the Taxes Act 1988 and Schedule 5B to the Taxation of Chargeable Gains Act 1992 (c. 12) on or after 7th March 2001 in relation to shares—

(i)that were issued after 31st December 1993 but before 7th March 2001, and

(ii)to which income tax relief or deferral relief was attributable immediately before 7th March 2001.

(3)The amendments made by paragraphs 15 to 21, 30 to 34 and 36 have effect—

(a)in relation to shares issued on or after 7th March 2001, and

(b)in relation to shares issued before that date, in respect of the application of the provisions mentioned in sub-paragraph (2)(b) in relation to—

(i)value received (within the meaning of section 300 of the Taxes Act 1988 or paragraph 13 of Schedule 5B to the Taxation of Chargeable Gains Act 1992), and

(ii)repayments made,

on or after that date.

(4)For the purposes of this paragraph—

  • “deferral relief” has the same meaning as in Schedule 5B to the Taxation of Chargeable Gains Act 1992 (c. 12) (enterprise investment scheme: reinvestment);

  • “income tax relief” means relief under Chapter 3 of Part 7 of the Taxes Act 1988 (enterprise investment scheme); and

  • “repayment” means a repayment, redemption, repurchase or payment mentioned in section 303(1) of the Taxes Act 1988 or paragraph 14(1) of Schedule 5B to the Taxation of Chargeable Gains Act 1992.

Section 64.

SCHEDULE 16Venture capital

Part 1Venture capital trusts

Meaning of “qualifying holdings”

1(1)In Schedule 28B to the Taxes Act 1988 (which specifies the requirements to be met by “qualifying holdings”), in paragraph 3 (requirements as to company’s business), in sub-paragraph (8)(a) for “the requirements mentioned in paragraphs (a) and (b) of paragraph 4(5) or (6) below are” substitute “the requirement mentioned in paragraph 4(5) below is”.

(2)The amendment made by this paragraph has effect, and shall be deemed always to have had effect, for the purpose of determining whether shares or securities issued on or after 6th April 2000 are, for the purposes of section 842AA of the Taxes Act 1988 (venture capital trusts), to be regarded as comprised in a company’s qualifying holdings.

2(1)In paragraph 6 of that Schedule (requirement as to money raised by investment), for sub-paragraphs (1) and (2) (employment of money wholly for purposes of trade) substitute—

(1)The requirements of this paragraph are that either—

(a)at least 80% of the money raised by the issue of the relevant holding must—

(i)have been employed wholly for the purposes of the trade by reference to which the requirements of paragraph 3(3) above are satisfied; or

(ii)be money which the relevant company or a relevant qualifying subsidiary of that company is intending to employ wholly for the purposes of that trade; or

(b)all of the money so raised must have been employed as mentioned in paragraph (a)(i) above.

(2)For the purposes of this Schedule—

(a)the requirements of sub-paragraph (1) above shall not be capable of being satisfied by virtue of paragraph (a)(ii) of that sub-paragraph at any time after 12 months have expired from the trading time, and

(b)the requirements of that sub-paragraph shall not be capable of being satisfied by virtue of paragraph (a)(i) of that sub-paragraph at any time after 24 months have expired from the trading time.

(2AA)In sub-paragraph (2) above, “the trading time” means whichever is applicable of the following—

(a)in a case where the requirements of sub-paragraph (3) of paragraph 3 above were satisfied in relation to the time when the relevant holding was issued by virtue of paragraph (a) of that sub-paragraph, that time; and

(b)in a case where they were satisfied in relation to that time by virtue of paragraph (b) of that sub-paragraph, the time when the relevant company or, as the case may be, the subsidiary in question began to carry on the intended trade..

(2)The amendment made by this paragraph has effect for the purpose of determining whether shares or securities held by the trust company (within the meaning of Schedule 28B to the Taxes Act 1988) on or after 7th March 2001 are, for the purposes of that Schedule, to be regarded as comprised in that company’s qualifying holdings.

Income tax relief: repayment supplements

3(1)In Schedule 15B to the Taxes Act 1988 (relief from income tax), omit paragraph 1(7) (modification of provisions relating to repayment supplements where effect given to claim for relief by repayment of tax).

(2)The amendment made by this paragraph has effect in relation to repayments of tax on or after 7th March 2001.

Part 2Corporate venturing scheme

Introductory

4Schedule 15 to the Finance Act 2000 (c. 17) (corporate venturing scheme) is amended in accordance with this Part.

Money raised by issue of shares

5(1)In paragraph 36 (requirement that money raised is employed for purposes of a relevant trade), for sub-paragraph (1) substitute—

(1)At least 80% of the money raised by the issuance of the relevant issue of shares must have been employed wholly for the purposes of a relevant trade not later than the time determined in accordance with sub-paragraph (1B).

(1A)All of the money so raised must have been so employed not later than 12 months after that time.

(1B)The time referred to in sub-paragraph (1) is—

(a)the end of the period of 12 months beginning with the issue of the shares, or

(b)where the relevant trade was not being carried on at the time the shares were issued, the end of the period of 12 months beginning when the issuing company or a subsidiary begins to carry on the relevant trade.

(1C)Sub-paragraphs (1) and (1A) are subject to sub-paragraph (5)..

(2)In sub-paragraph (5) of that paragraph—

(a)in paragraph (a) for “any of the money mentioned in sub-paragraph (1)” substitute “any of the money raised by the issuance of the relevant issue of shares”, and

(b)for “the requirement of sub-paragraph (1)” substitute “the requirement of sub-paragraph (1) does not apply and the requirement of sub-paragraph (1A)”.

(3)The amendments made by this paragraph have effect—

(a)in relation to shares issued on or after 7th March 2001, and

(b)in respect of the application of Schedule 15 to the Finance Act 2000 (c. 17) (corporate venturing scheme) on or after 7th March 2001 in relation to shares—

(i)that were issued after 31st March 2000 but before 7th March 2001, and

(ii)to which investment relief (within the meaning of that Schedule) was attributable immediately before 7th March 2001.

Receipt of replacement value

6(1)In paragraph 54 (receipt of replacement value), at the beginning of sub-paragraph (1)(c) insert “the amount of”.

(2)After sub-paragraph (2) of that paragraph insert—

(2A)Where the amount of the original value is, by virtue of paragraph 51, treated as reduced for the purposes of paragraph 47, the reference in sub-paragraph (1)(c) to the amount of the original value shall be read as a reference to the amount of that value disregarding the reduction..

(3)In sub-paragraph (3) of that paragraph (qualifying receipts), for paragraphs (a) to (c) substitute—

(a)by reason of the original recipient doing one or more of the following—

(i)making a payment to the original supplier other than an excepted payment;

(ii)acquiring any asset from the original supplier for a consideration the amount or value of which is more than the market value of the asset;

(iii)disposing of any asset to the original supplier for no consideration or for a consideration the amount or value of which is less than the market value of the asset; or

(b)where the receipt of the original value was within paragraph 49(1)(d), by reason of an event the effect of which is to reverse the event which constituted the receipt of the original value..

(4)After that sub-paragraph insert—

(3A)For the purposes of sub-paragraph (3)(a)(i), the following are excepted payments—

(a)any payment for any goods, services or facilities, provided (whether in the course of a trade or otherwise) by—

(i)the original supplier, or

(ii)any other person who, at any time in the period of restriction relating to the relevant shares, is an associate of, or connected with, that supplier (whether or not he is such an associate, or so connected, at the material time),

which is reasonable in relation to the market value of those goods, services or facilities;

(b)any payment of any interest which represents no more than a reasonable commercial return on money lent to—

(i)the original recipient, or

(ii)any other person who, at any time in the period of restriction relating to the relevant shares, is an associate of, or connected with, that recipient (whether or not he is such an associate, or so connected, at the material time);

(c)any payment, as rent for any property occupied by—

(i)that recipient, or

(ii)any person who, at any time in the period of restriction relating to the relevant shares, is an associate of, or connected with, that recipient (whether or not he is such an associate, or so connected, at the material time),

of an amount not exceeding a reasonable and commercial rent for the property;

(d)any payment within paragraph (c), (d) or (f) of the definition of “qualifying payment” in paragraph 49(5); and

(e)any payment for shares in or securities of any company in circumstances that do not fall within sub-paragraph (3)(a)(ii)..

(5)For sub-paragraph (4) of that paragraph (calculation of amounts of original and replacement value) substitute—

(4)For the purposes of this paragraph, the amount of the replacement value is—

(a)in a case within paragraph (a) of sub-paragraph (3), the aggregate of—

(i)the amount of any payment within sub-paragraph (i) of that paragraph, and

(ii)the difference between the market value of any asset to which sub-paragraph (ii) or (iii) of that paragraph applies and the amount or value of the consideration (if any) received for it, and

(b)in a case within sub-paragraph (3)(b), the amount of the original value,

and paragraph 50 shall apply for the purposes of determining the amount of the original value..

(6)The amendment made by sub-paragraph (1) shall be deemed always to have had effect.

(7)Subject to that, the amendments made by this paragraph have effect—

(a)in relation to shares issued on or after 7th March 2001, and

(b)in relation to shares issued after 31st March 2000 but before 7th March 2001, in respect of value received (within the meaning of paragraph 49 of Schedule 15 to the Finance Act 2000 (c. 17)) on or after 7th March 2001.

7(1)In paragraph 55 (provision supplementary to paragraph 54), after sub-paragraph (4) insert—

(5)In this paragraph “the original value” and “the replacement value” shall be construed in accordance with paragraph 54..

(2)The amendment made by this paragraph shall be deemed always to have had effect.

Value received by other persons

8(1)In paragraph 56 (reduction or withdrawal of investment relief as a result of value received by certain persons), in sub-paragraph (3) (receipts of value which do not result in the withdrawal or reduction of relief), after paragraph (c) insert—

or it would have the effect mentioned in paragraph (a), (b) or (c) were it not a receipt of insignificant value for the purposes of paragraph 47 (value received by the investing company), section 300 of the Taxes Act 1988 or paragraph 13 of Schedule 5B to the 1992 Act, as the case may be.

(2)The amendment made by this paragraph has effect—

(a)in relation to shares issued on or after 7th March 2001, and

(b)in respect of shares issued after 31st March 2000 but before 7th March 2001, in relation to any repayment (within the meaning of paragraph 57(2) of Schedule 15 to the Finance Act 2000) made on or after 7th March 2001.

Insignificant repayments disregarded

9(1)In paragraph 57 (repayments etc. of insignificant amounts disregarded for the purposes of paragraph 56), in sub-paragraph (1) after “remaining” insert “issued”.

(2)In sub-paragraph (3) of that paragraph for “payment” substitute “repayment”.

(3)The amendment made by sub-paragraph (1) has effect—

(a)in relation to shares issued on or after 7th March 2001, and

(b)in respect of shares issued after 31st March 2000 but before 7th March 2001, in relation to repayments (within the meaning of paragraph 57(2) of Schedule 15 to the Finance Act 2000) made on or after 7th March 2001.

(4)The amendment made by sub-paragraph (2) shall be deemed always to have had effect.

Section 65.

SCHEDULE 17Capital allowances: energy-saving plant and machinery

1In section 39 of the Capital Allowances Act 2001 (c. 2) (first-year allowances available for certain types of expenditure only), at the end add— , or

section 45Aexpenditure on energy-saving plant or machinery..

2After section 45 of that Act insert—

45AExpenditure on energy-saving plant or machinery

(1)Expenditure is first-year qualifying expenditure if—

(a)it is expenditure on energy-saving plant or machinery that is unused and not second-hand,

(b)it is incurred on or after 1st April 2001, and

(c)it is not excluded by section 46 (general exclusions).

(2)Energy-saving plant or machinery means plant or machinery in relation to which the following conditions are met—

(a)when the expenditure is incurred, or

(b)when the contract for the provision of the plant or machinery is entered into.

(3)The conditions are that the plant or machinery—

(a)is of a description specified by Treasury order, and

(b)meets the energy-saving criteria specified by Treasury order for plant or machinery of that description.

(4)Any such order may make provision by reference to any technology list, or product list, issued by the Secretary of State (whether before or after the coming into force of this section).

45BCertification of energy-saving plant and machinery

(1)The Treasury may by order provide that, in such cases as may be specified in the order, no section 45A allowance may be made unless a relevant certificate of energy efficiency is in force.

A “section 45A allowance” means a first-year allowance in respect of expenditure that is first-year qualifying expenditure under section 45A.

(2)A certificate of energy efficiency is one certifying that—

(a)particular plant or machinery, or

(b)plant or machinery constructed to a particular design,

meets the energy-saving criteria specified in relation to that description of plant or machinery by order under section 45A.

(3)A relevant certificate of energy efficiency means one issued—

(a)by the Secretary of State or a person authorised by the Secretary of State;

(b)in the case of plant or machinery used or for use in Scotland, by the Scottish Ministers or a person authorised by them;

(c)in the case of plant or machinery used or for use in Wales, by the National Assembly for Wales or a person authorised by it;

(d)in the case of plant or machinery used or for use in Northern Ireland, by the Department of Enterprise, Trade and Investment in Northern Ireland or a person authorised by it.

(4)If a certificate of energy efficiency is revoked—

(a)the certificate is to be treated for the purposes of this section as if it had never been issued, and

(b)all such assessments and adjustments of assessments are to be made as are necessary as a result of the revocation.

(5)If a person who has made a tax return becomes aware that, as a result of the revocation of a certificate of energy efficiency after the return was made, the return has become incorrect, he must give notice to the Inland Revenue specifying how the return needs to be amended.

(6)The notice must be given within 3 months beginning with the day on which the person first became aware that anything in the tax return had become incorrect because of the revocation of the certificate.

45CEnergy-saving components of plant or machinery

(1)This section applies for the purpose of apportioning expenditure incurred on plant or machinery if one or more components of the plant or machinery (but not all of it) is of a description specified by Treasury order under section 45A(3).

(2)If—

(a)only one of the components is of such a description, and

(b)an amount is specified by the order in respect of that component,

the part of the expenditure that is section 45A expenditure must not exceed that amount.

(3)If—

(a)more than one of the components are of such a description, and

(b)an amount is specified by the order in respect of each of those components,

the part of the expenditure that is section 45A expenditure must not exceed the total of those amounts.

(4)If the expenditure is treated under this Act as incurred in instalments, the proportion of each instalment that is section 45A expenditure is the same as the proportion of the whole of the expenditure that is section 45A expenditure.

(5)If this section applies, the expenditure is not apportioned under section 562(3) (apportionment where property sold with other property).

(6)In this section “section 45A expenditure” means expenditure that is first-year qualifying expenditure under section 45A.

3In section 46(1) of that Act (cases in which expenditure is not first-year qualifying expenditure), at the end add—

, or

section 45A (expenditure on energy-saving plant or machinery)..

4In section 52(3) of that Act (amount of first-year allowances), in the Table, at the end add—

Expenditure qualifying under section 45A (expenditure on energy-saving plant or machinery)100%

5In the second column of the Table in section 98 of the Taxes Management Act 1970 (c. 9) (penalty for failure to provide information etc.), in the entry relating to requirements imposed by provisions of the Capital Allowances Act 2001 (c. 2) , after “43(5) and (6),” insert “45B(5) and (6),”.

6(1)For the purposes of section 45A(2) of the Capital Allowances Act 2001 (c. 2), if—

(a)expenditure on plant or machinery is incurred, or a contract for the provision of plant or machinery is entered into, before the first order is made under section 45A(3) of that Act; and

(b)if that order had been made before the relevant time, the conditions in section 45A(3) of that Act would have been met,

those conditions shall be treated as if they were met at the relevant time.

(2)In sub-paragraph (1) “the relevant time” means the time when the expenditure was incurred or (as the case may be) the contract was entered into.

Section 66.

SCHEDULE 18Capital allowances: fixtures provided in connection with energy management services

1In section 172(3) of the Capital Allowances Act 2001 (c. 2) (scope of Chapter 14 of Part 2)—

(a)for “195” substitute “195B”; and

(b)for “192” substitute “192A”.

2After section 175 of that Act insert—

175AMeaning of “energy services agreement”

(1)In this Chapter “energy services agreement” means an agreement entered into by an energy services provider (“the energy services provider”) and another person (“the client”) that makes provision, with a view to saving energy or using energy more efficiently, for—

(a)the design of plant or machinery, or one or more systems incorporating plant or machinery,

(b)obtaining and installing the plant or machinery,

(c)the operation of the plant or machinery,

(d)the maintenance of the plant or machinery, and

(e)the amount of any payments in respect of the operation of the plant or machinery to be linked (wholly or in part) to energy savings or increases in energy efficiency resulting from the provision or operation of the plant or machinery.

(2)In this Chapter “energy services provider” means a person carrying on a qualifying activity consisting wholly or mainly in the provision of energy management services..

3In section 176(4) of that Act (treatment of fixture where expenditure incurred by person with interest in relevant land), for “section 177(4)” substitute “sections 177(4) and 180A(4)”.

4After section 180 of that Act insert—

180AEnergy services providers

(1)If—

(a)an energy services agreement is entered into,

(b)the energy services provider incurs capital expenditure under the agreement on the provision of plant or machinery,

(c)the plant or machinery becomes a fixture,

(d)at the time the plant or machinery becomes a fixture—

(i)the client has an interest in the relevant land, and

(ii)the energy services provider does not,

(e)the plant or machinery—

(i)is not provided for leasing, and

(ii)is not provided for use in a dwelling-house,

(f)the operation of the plant or machinery is carried out wholly or substantially by the energy services provider or a person connected with him,

(g)the energy services provider and the client are not connected persons, and

(h)they elect that this section should apply,

the energy services provider is to be treated, on and after the time at which he incurs the expenditure, as the owner of the fixture as a result of incurring the expenditure.

(2)But if the client would not have been entitled to a section 176 allowance in respect of the expenditure if he had incurred it, subsection (1) does not apply unless the plant or machinery belongs to a class of plant or machinery specified by Treasury order.

(3)In subsection (2) a “section 176 allowance” means an allowance to which a person is entitled as a result of section 176.

(4)If an election is made under this section, the client is not to be treated under section 176 as the owner of the fixture.

(5)An election under this section must be made by notice to the Inland Revenue—

(a)for income tax purposes, on or before the normal time limit for amending a tax return for the tax year in which the relevant chargeable period ends;

(b)for corporation tax purposes, no later than 2 years after the end of the relevant chargeable period.

(6)The “relevant chargeable period” means the chargeable period in which the capital expenditure was incurred..

5In section 181(4) of that Act (purchaser of land giving consideration for fixture), for “section 182” substitute “sections 182 and 182A”.

6After section 182 of that Act insert—

182APurchaser of land discharging obligations of client under energy services agreement

(1)If—

(a)after any plant or machinery has become a fixture, a person (“the purchaser”) acquires an interest in the relevant land,

(b)that interest was in existence before the purchaser’s acquisition of it,

(c)before that acquisition, the plant or machinery was provided under an energy services agreement, and

(d)in connection with that acquisition, the purchaser pays a capital sum to discharge the obligations of the client under the energy services agreement,

the purchaser is to be treated, on and after the time of the acquisition, as the owner of the fixture as a result of incurring expenditure, consisting of that capital sum, on the provision of the fixture.

(2)Subsection (1) does not apply, and is to be treated as never having applied, if, immediately after the time of the acquisition, a person has a prior right in relation to the fixture.

(3)Section 181(3) (test for whether person has a prior right) applies for the purposes of subsection (2)..

7(1)Section 188 of that Act (cessation of ownership when person ceases to have qualifying interest) is amended as follows.

(2)In subsection (1), after paragraph (c) insert—

(ca)section 182A (purchaser of land discharging obligations of client under energy services agreement),.

(3)In subsection (3)(a), for “or 182” substitute “, 182 or 182A”.

8After section 192 of that Act insert—

192ACessation of ownership of energy services provider

(1)This section applies if an energy services provider is treated under section 180A as the owner of a fixture.

(2)If—

(a)the energy services provider at any time assigns his rights under the energy services agreement, or

(b)the financial obligations of the client in respect of the fixture under an energy services agreement are at any time discharged (on the payment of a capital sum or otherwise),

the energy services provider is to be treated as ceasing to be the owner of the fixture at that time (or, as the case may be, the earliest of those times).

(3)The reference in subsection (2)(b) to the client is, in a case where the financial obligations of the client have become vested in another person (by assignment, operation of law or otherwise), a reference to the person in whom the obligations are vested when the capital sum is paid..

9After section 195 of that Act insert—

195AAcquisition of ownership by assignee of energy services provider

(1)If section 192A(2)(a) applies (cessation of ownership of energy services provider as a result of assignment), the assignee is to be treated, on and after the assignment—

(a)as having incurred expenditure, consisting of the consideration given by him for the assignment, on the provision of the fixture, and

(b)as being the owner of the fixture.

(2)For the purposes of section 192A (and subsection (1) and section 195B) the assignee is to be treated as being an energy services provider who owns the fixture under section 180A.

195BAcquisition of ownership by client

(1)If section 192A(2)(b) applies (discharge of obligations of client) because the client has paid a capital sum, the client is to be treated—

(a)as having incurred expenditure, consisting of the capital sum, on the provision of the fixture, and

(b)as being, on and after the time of payment, the owner of the fixture.

(2)Section 192A(3) (assignee of client) applies in relation to subsection (1)..

10(1)Section 196 of that Act (disposal values in relation to fixtures) is amended as follows.

(2)In subsection (1), in the Table, after item 8 insert—

8A. Cessation of ownership of the fixture because section 192A(2)(a) (assignment of rights) applies.The consideration given by the assignee for the assignment.
8B. Cessation of ownership of the fixture because section 192A(2)(b) (discharge of client’s obligations) applies on the payment of a capital sum.The capital sum paid to discharge the financial obligations of the client.

(3)After subsection (4) insert—

(4A)Section 192A(3) (assignee of client) applies in relation to item 8B of the Table..

(4)In subsection (5), for “192” substitute “192A”.

11In section 203(2)(b) of that Act (reasons for amendment of returns), after “182(2)” insert “, 182A(2)”.

Section 67.

SCHEDULE 19Capital allowances: conversion of parts of business premises into flats

Part 1New Part 4A of the Capital Allowances Act 2001

After Part 4 of the Capital Allowances Act 2001 (c. 2) insert—

Part 4AFlat conversion allowances

Chapter 1Introduction
393AFlat conversion allowances

(1)Allowances are available under this Part if a person incurs qualifying expenditure in respect of a flat.

(2)Allowances under this Part are made to the person who—

(a)incurred the expenditure, and

(b)has the relevant interest in the flat.

(3)In this Part “flat” means a dwelling which—

(a)is a separate set of premises (whether or not on the same floor),

(b)forms part of a building, and

(c)is divided horizontally from another part of the building.

(4)In this Part “dwelling” means a building or part of a building occupied or intended to be occupied as a separate dwelling.

Chapter 2Qualifying expenditure
393BMeaning of “qualifying expenditure”

(1)In this Part “qualifying expenditure” means capital expenditure incurred on, or in connection with—

(a)the conversion of part of a qualifying building into a qualifying flat,

(b)the renovation of a flat in a qualifying building if the flat is, or will be, a qualifying flat, or

(c)repairs to a qualifying building, to the extent that the repairs are incidental to expenditure within paragraph (a) or (b).

(2)Expenditure within subsection (1)(a) or (b) is not qualifying expenditure unless the part of the building, or the flat, in respect of which the expenditure is incurred—

(a)was unused, or

(b)was used only for storage,

throughout the period of one year ending immediately before the date on which the conversion or renovation work began.

(3)Expenditure is not qualifying expenditure if it is incurred on or in connection with—

(a)the acquisition of land or rights in or over land,

(b)the extension of a qualifying building (except to the extent required for the purpose of providing a means of getting to or from a qualifying flat),

(c)the development of land adjoining or adjacent to a qualifying building, or

(d)the provision of furnishings or chattels.

(4)For the purposes of this section, expenditure incurred on repairs to a building is to be treated as capital expenditure if it is not expenditure that would be allowed to be deducted in calculating the profits of a Schedule A business for tax purposes.

(5)Treasury regulations may make further provision as to expenditure which is, or is not, qualifying expenditure.

Chapter 3Qualifying buildings and qualifying flats
393CMeaning of “qualifying building”

(1)In this Part “qualifying building” means a building in respect of which the following requirements are met—

(a)all or most of the ground floor of the building must be authorised for business use,

(b)it must appear that, when the building was constructed, the storeys above the ground floor were for use primarily as one or more dwellings,

(c)the building must not have more than 4 storeys above the ground floor, and

(d)the construction of the building must have been completed before 1st January 1980.

(2)In subsection (1)(a) “authorised for business use” means—

(a)in the case of a building in England or Wales, authorised for use within class A1, A2, A3, B1 or D1(a) specified in the Schedule to the Town and Country Planning (Use Classes) Order 1987;

(b)in the case of a building in Scotland—

(i)authorised for use within class 1, 2, 3 or 4 specified in the Schedule to the Town and Country Planning (Use Classes) (Scotland) Order 1997,

(ii)authorised for a use specified in Article 3(5)(j) of that Order, or

(iii)authorised for use for the provision of medical or health services other than from premises attached to the residence of the consultant or practitioner;

(c)in the case of a building in Northern Ireland—

(i)authorised for use within class 1, 2, 3, 4 or 15(a) specified in the Schedule to the Planning (Use Classes) Order (Northern Ireland) 1989, or

(ii)authorised for a use specified in Article 3(5)(b), (c) or (h) of that Order.

(3)The attic storey does not count for the purposes of subsection (1)(c) unless it is or has been in use as a dwelling or part of a dwelling.

(4)The requirement in subsection (1)(d) is met even if the building has been extended on or after 1st January 1980, provided any extension was completed on or before 31st December 2000.

(5)Treasury regulations may make further provision as to the circumstances in which a building is, or is not, a qualifying building.

393DMeaning of “qualifying flat”

(1)In this Part “qualifying flat” means a flat in respect of which the following requirements are met—

(a)the flat must be in a qualifying building,

(b)the flat must be suitable for letting as a dwelling,

(c)the flat must be held for the purpose of short-term letting,

(d)it must be possible to gain access to the flat without using the part of the ground floor of the building that is authorised for business use (as defined in section 393C(2)),

(e)the flat must not have more than 4 rooms,

(f)the flat must not be a high value flat,

(g)the flat must not be (or have been) created or renovated as part of a scheme involving the creation or renovation of one or more high value flats, and

(h)the flat must not be let to a person connected with the person who incurred the expenditure on its conversion or renovation.

(2)In subsection (1)(c) “short-term letting” means letting as a dwelling on a lease for a term (or, in Scotland, period) of not more than 5 years.

(3)For the purposes of subsection (1)(e), the following are ignored in determining the number of rooms in a flat—

(a)any kitchen or bathroom, and

(b)any closet, cloakroom or hallway not exceeding 5 square metres in area.

(4)For the purposes of this Part, if a flat is a qualifying flat immediately before a period when it is temporarily unsuitable for letting as a dwelling, it is to be treated as being a qualifying flat during that period.

(5)Treasury regulations may make further provision as to the circumstances in which a flat is, or is not, a qualifying flat.

393EHigh value flats

(1)For the purposes of section 393D(1) a flat is a high value flat if the notional rent exceeds the relevant limit set out in the Table in subsection (5).

(2)The “notional rent” means the rent that could reasonably be expected for the flat on the relevant date, on the assumption that, on that date—

(a)the conversion or renovation has been completed,

(b)the flat is let furnished,

(c)the lease does not require the tenant to pay a premium or make any other payments to the landlord or a person connected with the landlord,

(d)the tenant is not connected with the person incurring the expenditure on the conversion or renovation of the flat, and

(e)in the case of a flat in England or Wales or Scotland, the flat is let on a shorthold tenancy.

(3)The “relevant date” means the date on which expenditure on—

(a)the conversion of part of the building into the flat, or

(b)(as the case may be) the renovation of the flat,

is first incurred.

(4)“Shorthold tenancy” means—

(a)in the case of a flat in England or Wales, an assured shorthold tenancy;

(b)in the case of a flat in Scotland, a short assured tenancy.

(5)The limit for the notional rent is as shown in the Table—

TABLE: NOTIONAL RENT LIMITS
Number of rooms in flatFlats in Greater LondonFlats elsewhere
1 or 2 rooms£350 per week£150 per week
3 rooms£425 per week£225 per week
4 rooms£480 per week£300 per week

(6)Treasury regulations may make provision amending the notional rent limits in the Table in subsection (5).

(7)Section 393D(3) (determination of number of rooms in flat) applies for the purposes of this section.

Chapter 4The relevant interest in the flat
393FGeneral rule as to what is the relevant interest

(1)The relevant interest in a flat in relation to any qualifying expenditure is the interest in the flat to which the person who incurred the expenditure was entitled when it was incurred.

(2)Subsection (1) is subject to the following provisions of this Chapter and to section 393V (provisions applying on termination of lease).

(3)If—

(a)the person who incurred the qualifying expenditure was entitled to more than one interest in the flat when the expenditure was incurred, and

(b)one of those interests was reversionary on all the others,

the reversionary interest is the relevant interest in the flat.

(4)An interest does not cease to be the relevant interest merely because of the creation of a lease or other interest to which that interest is subject.

(5)If—

(a)the relevant interest is a leasehold interest, and

(b)that interest is extinguished on the person entitled to it acquiring the interest which is reversionary on it,

the interest into which the leasehold interest merges becomes the relevant interest when the leasehold interest is extinguished.

393GInterest acquired on completion of conversion

For the purposes of determining the relevant interest in a flat, a person who—

(a)incurs expenditure on the conversion of part of a building into the flat, and

(b)is entitled to an interest in the flat on or as a result of the completion of the conversion,

is treated as having had that interest when the expenditure was incurred.

Chapter 5Initial allowances
393HInitial allowances

(1)A person who has incurred qualifying expenditure in respect of a flat is entitled to an initial allowance in respect of the expenditure.

(2)The amount of the initial allowance is 100% of the qualifying expenditure.

(3)A person claiming an initial allowance under this section may require the allowance to be reduced to a specified amount.

(4)The initial allowance is made for the chargeable period in which the qualifying expenditure is incurred.

393IFlat not qualifying flat or relevant interest sold before flat first let

(1)No initial allowance is to be made under section 393H if, at the relevant time, the flat is not a qualifying flat.

(2)An initial allowance which has been made in respect of a flat which is to be a qualifying flat is to be withdrawn if—

(a)the flat is not a qualifying flat at the relevant time, or

(b)the person to whom the allowance was made has sold the relevant interest in the flat before the relevant time.

(3)All such assessments and adjustments of assessments are to be made as are necessary to give effect to this section.

(4)In this section “the relevant time” means the time when the flat is first suitable for letting as a dwelling.

Chapter 6Writing-down allowances
393JEntitlement to writing-down allowances

(1)A person is entitled to a writing-down allowance for a chargeable period if he has incurred qualifying expenditure in respect of a flat and, at the end of the chargeable period—

(a)the person is entitled to the relevant interest in the flat,

(b)the person has not granted a long lease of the flat out of the relevant interest in consideration of the payment of a capital sum, and

(c)the flat is a qualifying flat.

(2)In subsection (1)(b) “long lease” means a lease the duration of which exceeds 50 years.

(3)Whether the duration of a lease exceeds 50 years is to be determined—

(a)in accordance with section 38(1) to (4) and (6) of ICTA, and

(b)without regard to section 393V(3) (new lease granted as a result of the exercise of an option treated as continuation of old lease).

(4)A person claiming a writing-down allowance may require the allowance to be reduced to a specified amount.

393KAmount of allowance

(1)The writing-down allowance for a chargeable period is 25% of the qualifying expenditure.

(2)The allowance is proportionately increased or reduced if the chargeable period is more or less than a year.

(3)The amount of the writing-down allowance for a chargeable period is limited to the residue of qualifying expenditure.

(4)For this purpose the residue is ascertained immediately before writing off the writing-down allowance at the end of the chargeable period.

393LMeaning of “the residue of qualifying expenditure”

The residue of qualifying expenditure is the qualifying expenditure that has not yet been written off in accordance with Chapter 8.

Chapter 7Balancing adjustments
393MWhen balancing adjustments are made

(1)A balancing adjustment is made if—

(a)qualifying expenditure has been incurred in respect of a flat, and

(b)a balancing event occurs.

(2)A balancing adjustment is either a balancing allowance or a balancing charge and is made for the chargeable period in which the balancing event occurs.

(3)A balancing allowance or balancing charge is made to or on the person who incurred the qualifying expenditure.

(4)No balancing adjustment is made if the balancing event occurs more than 7 years after the time when the flat was first suitable for letting as a dwelling.

(5)If more than one balancing event occurs, a balancing adjustment is made only on the first of them.

393NBalancing events

(1)The following are balancing events for the purposes of this Part—

(a)the relevant interest in the flat is sold;

(b)a long lease of the flat is granted out of the relevant interest in consideration of the payment of a capital sum;

(c)if the relevant interest is a lease, the lease ends otherwise than on the person entitled to it acquiring the interest reversionary on it;

(d)the person who incurred the qualifying expenditure dies;

(e)the flat is demolished or destroyed;

(f)the flat ceases to be a qualifying flat (without being demolished or destroyed).

(2)Section 393J(2) and (3) (meaning of “long lease”) apply for the purposes of subsection (1)(b).

393OProceeds from balancing events

(1)References in this Part to the proceeds from a balancing event are to the amounts received or receivable in connection with the event, as shown in the Table—

TABLE: BALANCING EVENTS AND PROCEEDS
1. Balancing event2. Proceeds from event
1. The sale of the relevant interest.The net proceeds of the sale.
2. The grant of a long lease out of the relevant interest.If the capital sum paid in consideration of the grant is less than the commercial premium, the commercial premium.
In any other case, the capital sum paid in consideration of the grant.
3. The coming to an end of a lease, where a person entitled to the lease and a person entitled to any superior interest are connected persons.The market value of the relevant interest in the flat at the time of the event.
4. The death of the person who incurred the qualifying expenditure.The residue of qualifying expenditure immediately before the death.
5. The demolition or destruction of the flat.

The net amount received for the remains of the flat, together with—

(a)

any insurance money received in respect of the demolition or destruction, and

(b)

any other compensation of any description so received, so far as it consists of capital sums.

6. The flat ceases to be a qualifying flat.The market value of the relevant interest in the flat at the time of the event.

(2)The amounts referred to in column 2 of the Table are those received or receivable by the person who incurred the qualifying expenditure.

(3)In Item 2 of the Table “the commercial premium” means the premium that would have been given if the transaction had been at arm’s length.

393PCalculation of balancing adjustments

(1)A balancing allowance is made if—

(a)there are no proceeds from the balancing event, or

(b)the proceeds from the balancing event are less than the residue of qualifying expenditure immediately before the event.

(2)The amount of the balancing allowance is the amount of—

(a)the residue (if there are no proceeds);

(b)the difference (if the proceeds are less than the residue).

(3)A balancing charge is made if the proceeds from the balancing event are more than the residue, if any, of qualifying expenditure immediately before the event.

(4)The amount of the balancing charge is the amount of—

(a)the difference, or

(b)the proceeds (if the residue is nil).

(5)The amount of a balancing charge made on a person must not exceed the total amount of—

(a)any initial allowances made to the person in respect of the expenditure, and

(b)any writing-down allowances made to the person in respect of the expenditure for chargeable periods ending on or before the date of the balancing event giving rise to the balancing adjustment.

Chapter 8Writing off qualifying expenditure
393QIntroduction

For the purposes of this Part qualifying expenditure is written off to the extent and at the times specified in this Chapter.

393RWriting off initial allowances and writing-down allowances

(1)If an initial allowance is made in respect of the qualifying expenditure, the amount of the allowance is written off at the time when the flat is first suitable for letting as a dwelling.

(2)If a writing-down allowance is made in respect of the qualifying expenditure, the amount of the allowance is written off at the end of the chargeable period for which the allowance is made.

(3)If a balancing event occurs at the end of the chargeable period referred to in subsection (2), the amount written off under that subsection is to be taken into account in calculating the residue of qualifying expenditure immediately before the event to determine what balancing adjustment (if any) is to be made.

393STreatment of demolition costs

(1)This section applies if—

(a)a qualifying flat is demolished, and

(b)the person who incurred the qualifying expenditure incurs the cost of the demolition.

(2)The net cost of the demolition is added to the residue of qualifying expenditure immediately before the demolition.

(3)“The net cost of the demolition” means the amount, if any, by which the cost of the demolition exceeds any money received for the remains of the flat.

(4)If this section applies, neither the cost of the demolition nor the net cost of the demolition is treated for the purposes of any Part of this Act as expenditure on any other property replacing the flat demolished.

Chapter 9Supplementary provisions
393TGiving effect to allowances and charges

(1)This section applies if a person is entitled or liable under this Part to an allowance or charge for a chargeable period.

(2)If the person’s interest in the flat is an asset of a Schedule A business carried on by him at any time in that period, the allowance or charge is to be given effect in calculating the profits of that business for that period, by treating—

(a)the allowance as an expense of that business, and

(b)the charge as a receipt of that business.

(3)If the person’s interest in the flat is not an asset of a Schedule A business carried on by him at any time in that period, the allowance or charge is to be given effect by treating him as if he had been carrying on a Schedule A business in that period and as if—

(a)the allowance were an expense of that business, and

(b)the charge were a receipt of that business.

393UApportionment of sums partly referable to non-qualifying assets

(1)If the sum paid for the sale of the relevant interest in a flat is attributable—

(a)partly to assets representing expenditure for which an allowance can be made under this Part, and

(b)partly to assets representing other expenditure,

only so much of the sum as on a just and reasonable apportionment is attributable to the assets referred to in paragraph (a) is to be taken into account for the purposes of this Part.

(2)Subsection (1) applies to other proceeds from a balancing event in respect of a flat as it applies to a sum given for the sale of the relevant interest in the flat.

(3)Subsection (1) does not affect any other provision of this Act requiring an apportionment of the proceeds of a balancing event.

393VProvisions applying on termination of lease

(1)This section applies for the purposes of this Part if a lease is terminated.

(2)If, with the consent of the lessor, the lessee of a flat remains in possession of the flat after the termination without a new lease being granted to him the lease is treated as continuing so long as the lessee remains in possession.

(3)If on the termination a new lease is granted to the lessee as a result of the exercise of an option available to him under the terms of the first lease, the second lease is treated as a continuation of the first.

(4)If on the termination the lessor pays a sum to the lessee in respect of a flat comprised in the lease, the lease is treated as if it had come to an end by surrender in consideration of the payment.

(5)If on the termination—

(a)another lease is granted to a different lessee, and

(b)in connection with the transaction that lessee pays a sum to the person who was the lessee under the first lease,

the two leases are to be treated as if they were the same lease which had been assigned by the lessee under the first lease to the lessee under the second lease in consideration of the payment.

393WMeaning of “lease” etc.

(1)In this Part “lease” includes—

(a)an agreement for a lease if the term to be covered by the lease has begun, and

(b)any tenancy,

but does not include a mortgage (and “lessee”, “lessor” and “leasehold interest” are to be read accordingly).

(2)In the application of this Part to Scotland—

(a)“leasehold interest” (or “leasehold estate”) means the interest of a tenant in property subject to a lease, and

(b)any reference to an interest which is reversionary on a leasehold interest or on a lease is to be read as a reference to the interest of the landlord in the property subject to the leasehold interest or lease..

Part 2Consequential amendments

1In section 1(2) of the Capital Allowances Act 2001 (c. 2) (capital allowances provided for by Act), after paragraph (c) insert—

(ca)Part 4A (flat conversion allowances);.

2In section 2(3) of that Act (provisions about giving effect to allowances and charges), after the entry in the list for sections 391 and 392 of that Act insert—

section 393T (flat conversion allowances);.

3In section 537(1) of that Act (general conditions for making contribution allowances under Parts 2 to 5), and in the section heading and the cross-heading preceding that section, for “Parts 2 to 5” substitute “Parts 2 to 4 and 5”.

4In section 542(1) of that Act (effect of transfers of C’s trade or relevant activity), for “Parts 3 to 5” substitute “Parts 3, 4 and 5”.

5In section 567(1) of that Act (Parts of Act for purposes of which provisions about sales not at market value apply), after “4,” insert “4A,”.

6In section 570(1) of that Act (elections under section 569: supplementary), after “Part 4” insert “or 4A”.

7In section 573(1) of that Act (transfers treated as sales), after “4” insert “, 4A”.

8(1)Part 2 of Schedule 1 to that Act (list of defined expressions) is amended as follows.

(2)Insert the following entries in the appropriate places—

“balancing adjustment (in Part 4A)section 393M”
“balancing event (in Part 4A)section 393N”
“dwelling (in Part 4A)section 393A(4)”
“flat (in Part 4A)section 393A(3)”
“lease and related expressions (in Part 4A)section 393W”
“proceeds from a balancing event (in Part 4A)section 393O”
“qualifying building (in Part 4A)section 393C”
“qualifying flat (in Part 4A)section 393D”
“relevant interest (in Part 4A)Chapter 4 of Part 4A”
“residue of qualifying expenditure (in Part 4A)section 393L”

(3)In the entry for “sale, transfers under Parts 3, 4 and 10 treated as”, after “4” insert “, 4A”.

Section 68.

SCHEDULE 20Capital allowances: offshore oil infrastructure

Part 1Chargeable periods ending before 1st or 6th April 2001

Writing-down allowances: infrastructure from UK or non-UK oil fields

1In Chapter 7 of Part 2 of the Capital Allowances Act 1990 (c. 1) (machinery and plant: miscellaneous expenditure), after section 62 insert—

62AAReuse etc. of offshore oil infrastructure

(1)This section applies where—

(a)a person carrying on a trade of oil extraction incurs decommissioning expenditure, and

(b)the machinery or plant concerned—

(i)has been brought into use for the purposes of the trade, and

(ii)is, or was when last in use for those purposes, offshore infrastructure.

(2)In this section—

  • “decommissioning expenditure” has the meaning given by section 62AB;

  • “offshore infrastructure” has the meaning given by section 62AC.

(3)The person’s qualifying expenditure for the chargeable period in which the decommissioning expenditure is incurred is treated for the purposes of sections 24 and 25 as increased by the amount of the decommissioning expenditure.

(4)Subsection (3) above is subject to subsections (5) and (6) below and section 62A(4A).

(5)Subsection (3) above does not apply to decommissioning expenditure on UK infrastructure unless it is incurred in connection with measures taken, wholly or substantially, in order to comply with—

(a)an abandonment programme within the meaning given by section 29 of the Petroleum Act 1998 (c. 17), or

(b)any condition to which the approval of such a programme is subject.

(6)Subsection (3) above does not apply to expenditure in respect of which an allowance or deduction could be made apart from that subsection in taxing, or computing, the person’s income for any purpose of income tax or corporation tax.

(7)For the purposes of subsection (5) above, decommissioning expenditure is “on UK infrastructure” if the machinery or plant concerned—

(a)is offshore infrastructure within section 62AC(1)(a) or (c), or

(b)is not offshore infrastructure but was offshore infrastructure within section 62AC(1)(a) or (c) when last in use for the purposes of the trade.

62ABMeaning of “decommissioning expenditure” in section 62AA

(1)In section 62AA “decommissioning expenditure” means expenditure in connection with—

(a)preserving machinery or plant pending its reuse or demolition,

(b)preparing machinery or plant for reuse,

(c)arranging for the reuse of machinery or plant, or

(d)demolishing machinery or plant.

(2)It is immaterial for the purposes of subsection (1)(a) above whether the machinery or plant is reused, is demolished or is partly reused and partly demolished.

(3)It is immaterial for the purposes of subsection (1)(b) and (c) above whether the machinery or plant is in fact reused.

62ACMeaning of “offshore infrastructure” in section 62AA

(1)In section 62AA “offshore infrastructure” means—

(a)an offshore installation within the meaning given by section 44 of the Petroleum Act 1998 or a part of such an installation, or

(b)something that would be, or would be a part of, an offshore installation within that meaning if in subsection (3) of that section “relevant waters” meant waters in a foreign sector of the continental shelf and other foreign tidal waters, or

(c)a pipeline within the meaning of section 26 of that Act, or a part of such a pipeline, that is in, under or over waters in—

(i)the territorial sea adjacent to the United Kingdom, or

(ii)an area designated under section 1(7) of the Continental Shelf Act 1964 (c. 29), or

(d)a pipeline within the meaning of section 26 of the Petroleum Act 1998 (c. 17), or a part of such a pipeline, that is in, under or over waters in a foreign sector of the continental shelf.

(2)In subsection (1)(b) and (d) above—

  • “foreign sector of the continental shelf” means an area within which rights are exercisable with respect to the sea bed and subsoil and their natural resources by a country or territory outside the United Kingdom;

  • “foreign tidal waters” means tidal waters in an area within which rights are exercisable with respect to the bed and subsoil of the body of water in question and their natural resources by a country or territory outside the United Kingdom..

Ring fence trades: special allowance for pre-cessation abandonment expenditure

2(1)Section 62A of the Capital Allowances Act 1990 (c. 1) (special allowance for costs of demolition of offshore machinery or plant) is amended as follows.

(2)In subsection (1) (section applies to expenditure that would otherwise fall within section 62(1)(b)), after “section 62(1)(b)” insert “or 62AA(3)”.

(3)In subsection (1)(c)—

(a)for “the demolition of” substitute “decommissioning”; and

(b)after “which is or forms part of” insert “, or when last in use for the purposes of the trade was or formed part of,”.

(4)In subsection (3)(a), for “demolition” (in both places) substitute “decommissioning”.

(5)After subsection (3) insert—

(3A)In this section “decommissioning”, in relation to any machinery or plant, means—

(a)demolishing the machinery or plant,

(b)preserving the machinery or plant pending its reuse or demolition,

(c)preparing the machinery or plant for reuse, or

(d)arranging for the reuse of the machinery or plant.

(3B)For the purposes of this section—

(a)in determining whether expenditure is incurred on preserving machinery or plant pending its reuse or demolition, it is immaterial whether the machinery or plant is reused, is demolished or is partly reused and partly demolished; and

(b)in determining whether expenditure is incurred on preparing machinery or plant for reuse, or on arranging for the reuse of machinery or plant, it is immaterial whether the machinery or plant is in fact reused..

(6)For subsection (4) (entitlement to special allowance) substitute—

(4)If the person incurring any abandonment expenditure so elects, for the chargeable period in which that expenditure is incurred there shall be made to that person an allowance equal to so much of the abandonment expenditure to which the election relates as is incurred in that period.

(4A)If a person makes such an election, neither of sections 62(1)(b) and 62AA(3) applies.

(4B)If machinery or plant is demolished, the total of any allowances under subsection (4) above in respect of expenditure on the decommissioning of the machinery or plant is reduced by the amount of any moneys received for the remains of the machinery or plant.

(4C)Effect is given to subsection (4B) above by setting the amount (until wholly utilised)—

  • first, against any allowance under subsection (4) above for the chargeable period in which the amount is received (as previously reduced in giving effect to subsection (4B));

  • second, against allowances under that subsection for earlier chargeable periods (as so reduced and taking later such periods before earlier ones); and

  • third, against allowances under that subsection for later chargeable periods (as so reduced and taking earlier such periods before later ones)..

(7)In subsection (5)(a) (election must specify amounts received for remains), for “subsection (4)(a)” substitute “subsection (4B)”.

(8)In the sidenote, for “demolition” substitute “decommissioning”.

Ring fence trades: allowances for post-cessation expenditure

3(1)Section 62B of the Capital Allowances Act 1990 (c. 1) (abandonment expenditure incurred within 3 years of ceasing ring fence trade) is amended as follows.

(2)In subsection (1)(b) (section applies where expenditure incurred within 3 years of ceasing trade), for “the demolition of” substitute “decommissioning”.

(3)In subsection (1)(c) (section applies where expenditure would have been abandonment expenditure under section 62A if incurred earlier), for “demolition” substitute “decommissioning”.

(4)In subsection (2) (expenditure net of receipts for remains is eligible for allowances), for “the machinery or plant referred to in that paragraph” substitute “any of the machinery or plant referred to in that paragraph on whose demolition any of the post-cessation expenditure was incurred”.

Commencement of Part 1

4(1)The amendments made by this Part of this Schedule apply to expenditure that is incurred—

(a)on or after 7th August 2000, and

(b)in a relevant chargeable period.

(2)The amendments made by paragraph 1 also apply to expenditure incurred before 7th August 2000 if the expenditure—

(a)is incurred in a relevant chargeable period, and

(b)is within sub-paragraph (3) or (4).

(3)Expenditure is within this sub-paragraph if—

(a)it is decommissioning expenditure on UK infrastructure, and

(b)it is incurred in connection with an abandonment programme approved on or after 7th August 2000.

(4)Expenditure is within this sub-paragraph if—

(a)it is decommissioning expenditure,

(b)it is not decommissioning expenditure on UK infrastructure, and

(c)it is incurred in connection with a decommissioning activity that takes place on or after 7th August 2000.

(5)The amendments made by paragraphs 2 and 3 also apply to expenditure incurred before 7th August 2000 if the expenditure—

(a)is incurred in a relevant chargeable period, and

(b)is incurred in connection with an abandonment programme approved on or after 7th August 2000.

(6)In sub-paragraphs (3) and (4), “decommissioning expenditure” and “decommissioning expenditure on UK infrastructure” have the same meaning as in the section 62AA inserted by paragraph 1.

(7)In sub-paragraph (4)(c) “decommissioning activity” means an activity mentioned in any of paragraphs (a) to (d) of the section 62AB(1) inserted by paragraph 1.

(8)In this paragraph “relevant chargeable period” means—

(a)for income tax purposes, a chargeable period ending before 6th April 2001, and

(b)for corporation tax purposes, a chargeable period ending before 1st April 2001.

Part 2Chargeable periods ending on or after 1st or 6th April 2001

Writing-down allowances: infrastructure from UK or non-UK oil fields

5(1)In Chapter 13 of Part 2 of the Capital Allowances Act 2001 (c. 2) (plant and machinery allowances: provisions affecting mining and oil industries), after section 161 insert—

Expenditure connected with reuse etc. of offshore oil infrastructure
161AMeaning of “offshore infrastructure”

(1)In sections 161C and 161D “offshore infrastructure” means—

(a)an offshore installation within the meaning given by section 44 of the Petroleum Act 1998 (c. 17) or a part of such an installation, or

(b)something that would be, or would be a part of, an offshore installation within that meaning if in subsection (3) of that section “relevant waters” meant waters in a foreign sector of the continental shelf and other foreign tidal waters, or

(c)a pipeline within the meaning of section 26 of that Act, or a part of such a pipeline, that is in, under or over waters in—

(i)the territorial sea adjacent to the United Kingdom, or

(ii)an area designated under section 1(7) of the Continental Shelf Act 1964 (c. 29), or

(d)a pipeline within the meaning of section 26 of the Petroleum Act 1998 (c. 17), or a part of such a pipeline, that is in, under or over waters in a foreign sector of the continental shelf.

(2)In subsection (1)(b) and (d)—

  • “foreign sector of the continental shelf” means an area within which rights are exercisable with respect to the sea bed and subsoil and their natural resources by a country or territory outside the United Kingdom;

  • “foreign tidal waters” means tidal waters in an area within which rights are exercisable with respect to the bed and subsoil of the body of water in question and their natural resources by a country or territory outside the United Kingdom.

161BMeaning of “decommissioning expenditure”

(1)In sections 161C and 161D “decommissioning expenditure” means expenditure in connection with—

(a)preserving plant or machinery pending its reuse or demolition,

(b)preparing plant or machinery for reuse, or

(c)arranging for the reuse of plant or machinery.

(2)It is immaterial for the purposes of subsection (1)(a) whether the plant or machinery is reused, is demolished or is partly reused and partly demolished.

(3)It is immaterial for the purposes of subsection (1)(b) and (c) whether the plant or machinery is in fact reused.

161CExpenditure related to reuse etc. qualifies for writing-down allowances

(1)This section applies where—

(a)a person carrying on a trade of oil extraction incurs decommissioning expenditure, and

(b)the plant or machinery concerned—

(i)has been brought into use for the purposes of the trade, and

(ii)is, or was when last in use for those purposes, offshore infrastructure.

(2)The decommissioning expenditure is allocated to the appropriate pool for the chargeable period in which it is incurred.

(3)Subsection (2) is subject to sections 161D and 164(4).

(4)In subsection (2) “the appropriate pool” means the pool to which the expenditure on the plant or machinery concerned has been or would be allocated in accordance with this Part.

161DExceptions to section 161C(2)

(1)Subsection (2) of section 161C does not apply to decommissioning expenditure on UK infrastructure unless it is incurred in connection with measures taken, wholly or substantially, in order to comply with—

(a)an abandonment programme within the meaning given by section 29 of the Petroleum Act 1998 (c. 17), or

(b)any condition to which the approval of such a programme is subject.

(2)Subsection (2) of section 161C does not apply to expenditure in respect of which an allowance or deduction could be made apart from that subsection in taxing, or computing, the person’s income for any tax purpose.

(3)For the purposes of subsection (1), decommissioning expenditure is “on UK infrastructure” if the plant or machinery concerned—

(a)is offshore infrastructure within section 161A(1)(a) or (c), or

(b)is not offshore infrastructure but was offshore infrastructure within section 161A(1)(a) or (c) when last in use for the purposes of the trade..

(2)In section 57(2) of the Capital Allowances Act 2001 (c. 2) (available qualifying expenditure in pool includes amounts allocated to pool under specified provisions), before the entry for section 165(3) insert—

section 161C(2) (decommissioning expenditure incurred by person carrying on trade of oil extraction);.

Ring fence trades: meaning of “abandonment expenditure”

6(1)Section 163 of the Capital Allowances Act 2001 (c. 2) (meaning of “abandonment expenditure”) is amended as follows.

(2)In subsection (2)(b), for “the demolition of” substitute “decommissioning”.

(3)In subsection (2)(b)(ii), at the end insert “or which, when last in use for the purposes of a ring-fence trade, was, or formed part of, such an installation or pipeline.”.

(4)In subsection (3), for “demolition” substitute “decommissioning”.

(5)After subsection (4) insert—

(4A)In this section “decommissioning”, in relation to any plant or machinery, means—

(a)demolishing the plant or machinery,

(b)preserving the plant or machinery pending its reuse or demolition,

(c)preparing the plant or machinery for reuse, or

(d)arranging for the reuse of the plant or machinery.

(4B)In determining whether expenditure is incurred on preserving plant or machinery pending its reuse or demolition, it is immaterial whether the plant or machinery is reused, is demolished or is partly reused and partly demolished.

(4C)In determining whether expenditure is incurred on preparing plant or machinery for reuse, or on arranging for the reuse of plant or machinery, it is immaterial whether the plant or machinery is in fact reused..

Ring fence trades: special allowance for pre-cessation expenditure

7(1)Section 164 of the Capital Allowances Act 2001 (c. 2) (abandonment expenditure incurred before cessation of ring fence trade) is amended as follows.

(2)In subsection (1) (person carrying on ring-fence trade may elect for special allowance if he incurs abandonment expenditure), after “incurs abandonment expenditure,” insert “and the plant or machinery concerned has been brought into use for the purposes of that trade,”.

(3)For paragraph (b) of subsection (3) (election must specify amounts received for remains of demolished plant or machinery) substitute—

(b)where the plant or machinery concerned has been or is to be demolished, any amounts received for its remains..

(4)In subsection (4)(a) (entitlement to special allowance), the words “, of an amount equal to the net abandonment cost,” are omitted.

(5)For paragraph (b) of subsection (4) (section 26(3) does not apply where election made) substitute—

(b)neither of sections 26(3) and 161C(2) (net cost of demolition where plant or machinery not replaced, or cost of preparing for reuse, added to existing pool) applies..

(6)For subsection (5) (meaning of “net abandonment cost”) substitute—

(5)The amount of the special allowance for a chargeable period is equal to so much of the abandonment expenditure to which the election relates as is incurred in that period.

(6)If plant or machinery is demolished, the total of any special allowances in respect of expenditure on decommissioning the plant or machinery is reduced by any amount received for the remains of the plant or machinery.

Here “decommissioning” has the meaning given by section 163(4A).

(7)Effect is given to subsection (6) by setting the amount (until wholly utilised)—

  • first, against any special allowance for the chargeable period in which the amount is received (as previously reduced in giving effect to subsection (6));

  • second, against special allowances for earlier chargeable periods (as so reduced and taking later such periods before earlier ones); and

  • third, against special allowances for later chargeable periods (as so reduced and taking earlier such periods before later ones).

Ring fence trades: allowances for post-cessation expenditure

8(1)Section 165 of the Capital Allowances Act 2001 (c. 2) (abandonment expenditure incurred within 3 years of ceasing ring fence trade) is amended as follows.

(2)In subsection (1)(b) (section applies where abandonment expenditure incurred within 3 years of ceasing trade), the words “on the demolition of plant or machinery” are omitted.

(3)In subsection (3)(b) (amounts received for remains of plant or machinery are not taxable income), before “any amount received” insert “where any of the abandonment expenditure was incurred on the demolition of plant or machinery,”.

(4)In subsection (4), in the definition of “the relevant abandonment cost”, for “the plant or machinery” substitute “any plant or machinery on whose demolition any of the abandonment expenditure was incurred”.

Commencement of Part 2

9(1)The amendments made by this Part of this Schedule (but see sub-paragraph (9)) apply to expenditure that is incurred—

(a)on or after 7th August 2000, and

(b)in a relevant chargeable period.

(2)The amendments made by paragraph 5 also apply to expenditure incurred before 7th August 2000 if the expenditure—

(a)is incurred in a relevant chargeable period, and

(b)is within sub-paragraph (3) or (4).

(3)Expenditure is within this sub-paragraph if—

(a)it is decommissioning expenditure on UK infrastructure, and

(b)it is incurred in connection with an abandonment programme approved on or after 7th August 2000.

(4)Expenditure is within this sub-paragraph if—

(a)it is decommissioning expenditure,

(b)it is not decommissioning expenditure on UK infrastructure, and

(c)it is incurred in connection with a decommissioning activity that takes place on or after 7th August 2000.

(5)The amendments made by paragraphs 6 to 8 (but see sub-paragraph (9)) also apply to expenditure incurred before 7th August 2000 if the expenditure—

(a)is incurred in a relevant chargeable period, and

(b)is incurred in connection with an abandonment programme approved on or after 7th August 2000.

(6)In sub-paragraphs (3) and (4), “decommissioning expenditure” and “decommissioning expenditure on UK infrastructure” have the same meaning as in the sections 161C and 161D inserted by paragraph 5.

(7)In sub-paragraph (4)(c) “decommissioning activity” means an activity mentioned in any of paragraphs (a) to (c) of the section 161B(1) inserted by paragraph 5.

(8)In this paragraph “relevant chargeable period” means—

(a)for income tax purposes, a chargeable period ending on or after 6th April 2001, and

(b)for corporation tax purposes, a chargeable period ending on or after 1st April 2001.

(9)Sub-paragraphs (1) to (8) do not apply to the amendments made by paragraphs 7(2) and 8(2).

Those amendments shall be deemed always to have had effect.

Section 69.

SCHEDULE 21Capital allowances: minor amendments

Thermal insulation of industrial buildings

1In section 28(2) of the Capital Allowances Act 2001 (c. 2) (expenditure on thermal insulation of industrial buildings), after “ordinary Schedule A business” insert “or an overseas property business”.

Fixtures: purchasers of land and incoming lessees

2(1)In section 181 of that Act (purchaser of land giving consideration for fixture), for subsection (2) substitute—

(2)Subsection (1) does not apply, and is to be treated as never having applied, if, immediately after the time of the acquisition, a person has a prior right in relation to the fixture..

(2)In section 181(3) of that Act—

(a)for “subsection (2)(b), the person holding the other interest” substitute “subsection (2), a person”; and

(b)for “subsection (2)(a)” substitute “subsection (2)”.

(3)In section 182 of that Act (purchaser of land discharging obligations of equipment lessee), for subsections (2) and (3) substitute—

(2)Subsection (1) does not apply, and is to be treated as never having applied, if, immediately after the time of the acquisition, a person has a prior right in relation to the fixture.

(3)Section 181(3) (test for whether person has a prior right) applies for the purposes of subsection (2)..

(4)In section 184 of that Act (incoming lessee where lessor not entitled to allowances), for subsections (2) and (3) substitute—

(2)Subsection (1) does not apply, and is to be treated as never having applied, if, immediately after the time when the lease is granted, a person has a prior right in relation to the fixture.

(3)Section 181(3) (test for whether person has a prior right) applies for the purposes of subsection (2)..

Meaning of “sale and finance leaseback”

3In section 221(1) of that Act (meaning of “sale and finance leaseback”), in paragraph (b)(iii), for “any person” substitute “S or by a person (other than B) who is connected with S”.

Effect of partnership changes

4(1)In section 263 of that Act (effect of partnership changes for the purpose of plant and machinery allowances), in subsection (1), for paragraph (c) substitute—

(c)the change does not result in the qualifying activity being treated as permanently discontinued under section 113(1) or 337(1) of ICTA (changes in persons carrying on a trade etc. and effect of company ceasing to trade etc.)..

(2)In section 558 of that Act (effect of partnership changes for the purpose of other allowances), in subsection (1), for paragraph (c) substitute—

(c)the change does not result in the relevant activity being treated as permanently discontinued under section 113(1) or 337(1) of ICTA (changes in persons carrying on a trade etc. and effect of company ceasing to trade etc.).

Enterprise zones

5In section 298(3) of that Act (meaning of “enterprise zone”), after “Secretary of State” insert “, the Scottish Ministers or the National Assembly for Wales,”.

Highway concessions

6(1)In section 341(4) of that Act (meaning of “highway concession”), for “the Secretary of State or from the Department for Regional Development in Northern Ireland” substitute “the relevant authority”.

(2)After that subsection add—

(5)In subsection (4) “the relevant authority” means—

(a)the Secretary of State,

(b)the Scottish Ministers,

(c)the National Assembly for Wales, or

(d)the Department for Regional Development in Northern Ireland..

Section 70.

SCHEDULE 22Remediation of contaminated land

Part 1Deduction for capital expenditure

Deduction for capital expenditure

1(1)This paragraph applies if—

(a)land in the United Kingdom is, or has been, acquired by a company for the purposes of a trade carried on by the company,

(b)at the time of acquisition all or part of the land is or was in a contaminated state (see paragraph 3), and

(c)the company incurs capital expenditure which is qualifying land remediation expenditure in respect of the land (see paragraph 2).

(2)For the purposes of corporation tax such capital expenditure as is qualifying land remediation expenditure shall (if the company so elects) be allowed as a deduction in computing the profits of the trade for the accounting period in which that expenditure is incurred.

(3)For the purposes of sub-paragraph (2) any capital expenditure incurred for the purposes of a trade by a company about to carry it on shall be treated as if it had been incurred by that company on the first day on which it does carry it on and in the course of doing so.

(4)Sub-paragraph (2) shall not apply to so much of the qualifying land remediation expenditure as—

(a)represents expenditure which has been allowed as a deduction in computing the profits arising from the trade for any accounting period preceding the period in which the expenditure is incurred, or

(b)represents capital expenditure in respect of which an allowance has been, or may be, made under the enactments relating to capital allowances.

(5)A company is not entitled to a deduction under this paragraph in respect of expenditure on land all or part of which is in a contaminated state, if the land is in that state wholly or partly as a result of any thing done or omitted to be done at any time by the company or a person with a relevant connection to the company.

(6)An election under this paragraph must specify the accounting period in respect of which it is made.

(7)The election must be made by notice in writing to the Inland Revenue.

(8)The notice must be given before the end of the period of two years beginning with the end of the company’s accounting period to which the election relates.

Qualifying land remediation expenditure

2(1)For the purposes of this Schedule “qualifying land remediation expenditure” of a company means expenditure of the company that meets the conditions in sub-paragraphs (2) to (6).

(2)The first condition is that it is expenditure on land all or part of which is in a contaminated state (see paragraph 3).

(3)The second condition is that the expenditure is expenditure on relevant land remediation directly undertaken by the company or on its behalf (see paragraph 4).

(4)The third condition is that the expenditure is incurred—

(a)on employee costs (see paragraph 5), or

(b)on materials (see paragraph 6),

or is qualifying expenditure on sub-contracted land remediation (see paragraphs 9 to 11).

(5)The fourth condition is that the expenditure would not have been incurred had the land not been in a contaminated state (see paragraph 7).

(6)The fifth condition is that the expenditure is not subsidised (see paragraph 8).

Land in a contaminated state

3(1)For the purposes of this Schedule land is in a contaminated state if, and only if, it is in such a condition, by reason of substances in, on or under the land, that—

(a)harm is being caused or there is a possibility of harm being caused; or

(b)pollution of controlled waters is being, or is likely to be, caused.

(2)For the purposes of this Schedule, a nuclear site is not land in a contaminated state.

(3)In this paragraph a “nuclear site” means—

(a)any site in respect of which a nuclear site licence is for the time being in force, or

(b)any site in respect of which, after the revocation or surrender of a nuclear site licence, the period of responsibility of the licensee has not yet come to an end;

and “nuclear site licence”, “licensee” and “period of responsibility” have the same meaning as in the Nuclear Installations Act 1965 (c. 57).

Relevant land remediation

4(1)For the purposes of this Schedule relevant land remediation, in relation to land acquired by a company, means—

(a)activities falling within sub-paragraph (2), and

(b)if there are such activities, preparatory activity falling within sub-paragraph (4) which satisfies the condition in sub-paragraph (5).

(2)The activities referred to in sub-paragraph (1)(a) are the doing of any works, the carrying out of any operations or the taking of any steps in relation to—

(a)the land in question,

(b)any controlled waters affected by that land, or

(c)any land adjoining or adjacent to that land,

for the purpose described in sub-paragraph (3).

(3)The purpose referred to in sub-paragraph (2) is that of—

(a)preventing or minimising, or remedying or mitigating the effects of, any harm, or any pollution of controlled waters, by reason of which the land is in a contaminated state; or

(b)restoring the land or waters to their former state.

(4)The preparatory activity referred to in sub-paragraph (1)(b) is the doing of anything for the purpose of assessing the condition of—

(a)the land in question,

(b)any controlled waters affected by that land, or

(c)any land adjoining or adjacent to that land.

(5)Preparatory activity satisfies the condition referred to in sub-paragraph (1)(b) if it is activity connected to such activities falling within sub-paragraph (2) as are undertaken by the company (whether directly or on its behalf).

(6)For the purposes of this paragraph, controlled waters are “affected by” land in a contaminated state if, and only if, the land in question is in such a condition, by reason of substances in, on or under the land, that pollution of those waters is being, or is likely to be, caused.

Employee costs

5(1)For the purposes of this Schedule the employee costs of a company are—

(a)the emoluments paid by the company to directors or employees of the company, including all salaries, wages, perquisites and profits whatsoever other than benefits in kind;

(b)the secondary Class 1 national insurance contributions paid by the company; and

(c)the contributions paid by the company to any pension fund (within the meaning of section 231A(4) of the Taxes Act 1988) operated for the benefit of directors or employees of the company.

(2)The employee costs of a company attributable to relevant land remediation are those paid to, or in respect of, directors or employees directly and actively engaged in that relevant land remediation.

(3)In the case of a director or employee partly engaged directly and actively in relevant land remediation the following rules apply—

(a)if the time he spends so engaged is less than 20% of his total working time, none of the employee costs relating to him are treated as attributable to relevant land remediation;

(b)if the time he spends so engaged is more than 80% of his total working time, the whole of the employee costs relating to him are treated as attributable to relevant land remediation;

(c)in any other case, an appropriate proportion of the employee costs relating to him are treated as attributable to relevant land remediation.

(4)For the purpose of sub-paragraphs (2) and (3) persons who provide services, such as secretarial or administrative services, in support of activities carried on by others, are not, by virtue of providing those services, to be treated as themselves directly and actively engaged in those activities.

Expenditure on materials

6For the purposes of this Schedule expenditure on materials is attributable to relevant land remediation if the materials are employed directly in that relevant land remediation.

Expenditure incurred because of contamination

7(1)Without prejudice to the generality of paragraph 2(5), this paragraph has effect for the purpose of determining whether expenditure would or would not have been incurred had not all or part of the land been in a contaminated state.

(2)If expenditure on the land is increased by reason only that the land is in a contaminated state, the amount by which such expenditure is increased shall be considered to be expenditure satisfying the condition in paragraph 2(5).

(3)If any works are done, operations are carried out or steps are taken mainly for the purpose described in paragraph 4(3), expenditure on such works, operations or steps shall be taken to satisfy the condition in paragraph 2(5).

Subsidised expenditure

8(1)For the purposes of this Schedule a company’s expenditure is treated as subsidised to the extent that—

(a)a grant or subsidy is obtained in respect of the expenditure; or

(b)it is otherwise met directly or indirectly by any person other than the company.

(2)For the purposes of this Schedule a grant, subsidy or payment that is not allocated to particular expenditure shall be allocated to expenditure of the recipient in such manner as is just and reasonable.

Qualifying expenditure on sub-contracted land remediation

9(1)The provisions of paragraphs 10 and 11 have effect for determining the amount of the qualifying expenditure of a company (“the company”) on sub-contracted land remediation.

(2)For the purposes of this Schedule the company incurs expenditure on sub-contracted land remediation if it makes a payment (a “sub-contractor payment”) to another person (“the sub-contractor”) in respect of relevant land remediation contracted out by the company to that person.

Treatment of expenditure where company and sub-contractor are connected persons

10(1)Where—

(a)the company and the sub-contractor are connected persons, and

(b)in accordance with normal accounting practice—

(i)the whole of the sub-contractor payment has been brought into account in determining the sub-contractor’s profit or loss for a relevant period, and

(ii)all of the sub-contractor’s relevant expenditure has been so brought into account,

the whole of the payment (up to the amount of the sub-contractor’s relevant expenditure) is qualifying expenditure on sub-contracted land remediation.

(2)In sub-paragraph (1)—

(a)references to the “relevant expenditure” of the sub-contractor are to expenditure that—

(i)is incurred by the sub-contractor in carrying on, on behalf of the company, the activities to which the sub-contractor payment relates,

(ii)is not of a capital nature,

(iii)is incurred on employee costs or materials, and

(iv)is not subsidised;

(b)a “relevant period” means a period—

(i)for which accounts are drawn up for the sub-contractor, and

(ii)that ends not more than twelve months after the end of the company’s period of account in which the sub-contractor payment is, in accordance with normal accounting practice, brought into account in determining the company’s profit or loss.

(3)Paragraph 5 (employee costs) and paragraph 8 (subsidised expenditure) apply for the purposes of determining whether the sub-contractor’s expenditure meets the requirements of sub-paragraph (2)(a)(iii) and (iv).

For this purpose the references in those paragraphs to a company shall be read as references to the sub-contractor.

(4)Any apportionment of expenditure of the company or the sub-contractor necessary for the purposes of this paragraph shall be made on a just and reasonable basis.

Treatment of sub-contractor payment in other cases

11Where—

(a)the company makes a sub-contractor payment, and

(b)paragraph 10 (treatment of expenditure where company and sub-contractor are connected) does not apply,

the whole of the amount of the sub-contractor payment is treated as qualifying expenditure on sub-contracted land remediation.

Part 2Entitlement to land remediation relief

Entitlement to relief

12(1)This paragraph applies if—

(a)land in the United Kingdom is, or has been, acquired by a company for the purposes of a Schedule A business or a trade carried on by the company,

(b)at the time of acquisition all or part of the land is or was in a contaminated state, and

(c)the company incurs qualifying land remediation expenditure in respect of the land.

(2)A company is entitled to land remediation relief for an accounting period if the company’s qualifying land remediation expenditure is deductible in that period.

(3)The company’s qualifying land remediation expenditure is deductible in that period if it is allowable as a deduction in computing for tax purposes the profits for that period of a Schedule A business or a trade carried on by the company.

(4)A company is not entitled to land remediation relief in respect of expenditure on land all or part of which is in a contaminated state, if the land is in that state wholly or partly as a result of any thing done or omitted to be done at any time by the company or a person with a relevant connection to the company.

Part 3Manner of giving effect to relief

Deduction in computing profits of Schedule A business or trade

13Where—

(a)a company is entitled to land remediation relief for an accounting period,

(b)it is carrying on a Schedule A business or a trade in that period, and

(c)it has qualifying land remediation expenditure that is allowable as a deduction in computing for tax purposes the profits of the Schedule A business or the trade for that period,

it may (on making a claim) treat that qualifying land remediation expenditure as if it were an amount equal to 150% of the actual amount.

Entitlement to land remediation tax credit

14(1)A company may claim a land remediation tax credit if in an accounting period it has a “qualifying land remediation loss”.

(2)A company has a “qualifying land remediation loss” for this purpose if in an accounting period—

(a)paragraph 13 applies, and

(b)the company incurs a Schedule A loss or a trading loss in that period in the Schedule A business or the trade referred to in paragraph 13(b).

(3)The amount of the qualifying land remediation loss is equal to the lesser of—

(a)150% of the related qualifying land remediation expenditure, and

(b)so much of the company’s Schedule A loss or trading loss as is unrelieved.

(4)For this purpose the amount of a Schedule A loss or trading loss that is “unrelieved” is the amount of that loss reduced by the amount of—

(a)any relief that was or could have been obtained by the company making a claim under section 392A(1) or 393A(1)(a) of the Taxes Act 1988 to set the loss against profits of whatever description of the same accounting period,

(b)any other relief obtained by the company in respect of the loss, including relief under section 393A(1)(b) of that Act (losses set against profits of an earlier accounting period), and

(c)any loss surrendered under section 403(1) of that Act (surrender of relief to group or consortium members).

(5)No account shall be taken for this purpose of—

(a)any Schedule A losses or trading losses brought forward from an earlier accounting period under section 392A(2) or 393(1) of the Taxes Act 1988, or

(b)any trading losses carried back from a later accounting period under section 393A(1)(b) of that Act.

(6)Sub-paragraphs (7) to (9) apply for the purpose of determining the amount of a Schedule A loss that is “unrelieved” in an accounting period in a case where the Schedule A loss is a loss treated under section 432AB(3) of the Taxes Act 1988 as an amount of expenses of management under section 76 of that Act.

(7)If in that accounting period no amount falls to be carried forward to a succeeding accounting period under section 75(3) of the Taxes Act 1988 (carrying forward expenses of management and charges on income where such expenses and charges exceed amount of profits from which deductible), no amount of the Schedule A loss is unrelieved.

(8)If in that accounting period an amount falls to be carried forward to a succeeding accounting period under section 75(3) of that Act, the amount of the Schedule A loss that is unrelieved is equal to the lesser of—

(a)the amount of the Schedule A loss, and

(b)the amount which so falls to be carried forward.

(9)In determining for the purposes of sub-paragraphs (7) and (8) whether there is an amount which falls to be carried forward under section 75(3) of the Taxes Act 1988, there shall be disregarded any amounts brought forward from an earlier accounting period and treated as expenses of management for the period in question by virtue of—

(a)a previous application of section 75(3) of that Act, or

(b)paragraph 4(4) of Schedule 11 to the Finance Act 1996 (c. 8) (loan relationships deficit carried forward and treated as expenses of management).

(10)If—

(a)the company is an insurance company, and

(b)it is treated under section 432AA of the Taxes Act 1988 as carrying on more than one Schedule A business,

references in this paragraph to a Schedule A loss shall be construed in accordance with section 432AB(4) or (6) of that Act (aggregation of losses where an insurance company is treated under section 432AA as having more than one Schedule A business).

Amount of land remediation tax credit

15(1)The amount of the land remediation tax credit to which a company is entitled for an accounting period is an amount equal to 16% of the amount of the qualifying land remediation loss for the period.

(2)The Treasury may by order substitute for the percentage for the time being specified in sub-paragraph (1) such other percentage as they think fit.

(3)An order under sub-paragraph (2) may make such incidental, supplemental, consequential or transitional provision as the Treasury think fit.

Payment in respect of land remediation tax credit

16(1)Where—

(a)the company is entitled to a land remediation tax credit for an accounting period, and

(b)makes a claim,

the Inland Revenue shall pay to the company the amount of the credit.

(2)An amount payable in respect of—

(a)a land remediation tax credit, or

(b)interest on a land remediation tax credit under section 826 of the Taxes Act 1988,

may be applied in discharging any liability of the company’s to pay corporation tax, and to the extent that it is so applied the Inland Revenue’s obligation under sub-paragraph (1) is discharged.

(3)Where the company’s company tax return for the accounting period is enquired into by the Inland Revenue, no payment in respect of a land remediation tax credit for that period need be made before the Inland Revenue’s enquiries are completed (see paragraph 32 of Schedule 18 to the Finance Act 1998 (c. 36)).

In those circumstances the Inland Revenue may make a payment on a provisional basis of such amount as they think fit.

(4)No payment need be made in respect of a land remediation tax credit for an accounting period before the company has paid to the Inland Revenue any amount that it is required to pay for payment periods ending in that accounting period—

(a)under the PAYE regulations, or

(b)in respect of Class 1 national insurance contributions.

(5)In this paragraph—

  • “PAYE regulations” means regulations under section 203 of the Taxes Act 1988;

  • “payment period” means a period which ends on the 5th day of a month and for which the company is liable to account for income tax and national insurance contributions to the Inland Revenue.

Restriction on losses carried forward

17(1)For the purposes of section 392A of the Taxes Act 1988 (relief of Schedule A losses against future Schedule A losses), a company’s Schedule A loss for a period in which it claims a land remediation tax credit is treated as reduced by the amount of the loss surrendered.

(2)For the purposes of section 393 of the Taxes Act 1988 (relief of trading losses against future trading profits), a company’s trading loss for a period for which it claims a land remediation tax credit is treated as reduced by the amount of the loss surrendered.

(3)Sub-paragraph (4) applies if in an accounting period—

(a)a company’s Schedule A loss is a loss treated under section 432AB(3) of the Taxes Act 1988 as an amount of expenses of management under section 76 of that Act,

(b)an amount falls to be carried forward to a succeeding accounting period under section 75(3) of that Act (carrying forward expenses of management and charges on income where such expenses and charges exceed amount of profits from which deductible), and

(c)the company claims a land remediation tax credit for the accounting period.

(4)Where this sub-paragraph applies, the amount which falls to be carried forward to a succeeding accounting period under section 75(3) of the Taxes Act 1988 is treated as reduced by the amount of the loss surrendered.

(5)For the purposes of this paragraph the amount of the loss surrendered is—

(a)where the maximum amount of land remediation tax credit was claimed, the whole of the qualifying land remediation loss for that period;

(b)where less than the maximum amount was claimed, a corresponding proportion of the qualifying land remediation loss for that period.

The “maximum amount” here means the amount specified in paragraph 15(1).

Tax credit not income

18A payment in respect of a land remediation tax credit is not income of the company for any tax purpose.

Certain qualifying land remediation expenditure excluded for purposes of capital gains

19If in an accounting period—

(a)a company has a qualifying land remediation loss, and

(b)by virtue of that qualifying land remediation loss, a payment is made to the company in respect of a land remediation tax credit,

the related qualifying land remediation expenditure shall be treated as if it were expenditure excluded for the purposes of capital gains tax under section 39 of the Taxation of Chargeable Gains Act 1992 (c. 12).

Part 4Special provision for life assurance business

Limitation on relief

20Where for any accounting period the profits arising to an insurance company from its life assurance business, or from any category of its life assurance business, fall to be computed in accordance with the provisions of the Taxes Act 1988 applicable to Case I of Schedule D, no deduction for capital expenditure under paragraph 1 and no land remediation relief under paragraph 12 shall be allowable.

Provision in respect of “I minus E” basis

21Paragraphs 22 to 28 apply where for any accounting period the profits arising to an insurance company from its life assurance business fall to be computed otherwise than in accordance with the provisions of the Taxes Act 1988 applicable to Case I of Schedule D.

Entitlement to relief: “I minus E” basis

22(1)Sub-paragraph (2) applies if—

(a)land in the United Kingdom is a management asset of a company,

(b)at the time of acquisition by the company all or part of the land is or was in a contaminated state, and

(c)in any accounting period, the company incurs qualifying expenditure in respect of the land.

(2)Where this sub-paragraph applies, the company is entitled to relief for that accounting period in respect of its qualifying expenditure.

(3)For the purposes of this paragraph, the amount of a company’s qualifying expenditure in an accounting period is the amount of its qualifying land remediation expenditure in that period reduced by the amount (if any) which by virtue of section 76(1)(d) of the Taxes Act 1988 is not to be treated as expenses of management.

(4)A company is not entitled to relief under this paragraph in respect of expenditure on land all or part of which is in a contaminated state, if the land is in that state wholly or partly as a result of any thing done or omitted to be done at any time by the company or a person with a relevant connection to the company.

(5)For the purposes of this paragraph, land is a management asset of a company if it is—

(a)an asset provided for use or used for the management of life assurance business carried on by the company, or

(b)an asset in respect of which expenditure is being incurred with a view to such use by the company.

Giving effect to relief: enhanced expenses of management

23(1)If a company is entitled to relief under paragraph 22 for an accounting period in respect of its qualifying expenditure, sub-paragraph (2) shall apply for the purposes of section 76 of the Taxes Act 1988 (computing profits of company carrying on life assurance business: deduction of expenses of management etc).

(2)Where this sub-paragraph applies, the company may (on making a claim) treat an amount equal to 150% of the actual amount of the qualifying expenditure (as determined in accordance with paragraph 22(3)) as part of its expenses of management for that period.

Entitlement to life assurance company tax credit

24(1)A company may claim a life assurance company tax credit under this paragraph if in an accounting period it has a “qualifying loss”.

(2)A company has a “qualifying loss” for this purpose if in an accounting period—

(a)the company is entitled to relief under paragraph 22, and

(b)an amount falls to be carried forward to a succeeding accounting period under section 75(3) of the Taxes Act 1988 (carrying forward expenses of management and charges on income where such expenses and charges exceed amount of profits from which deductible).

(3)In determining for the purposes of sub-paragraph (2)(b) whether there is an amount which falls to be carried forward under section 75(3) of that Act, there shall be disregarded any amounts brought forward from an earlier accounting period and treated as expenses of management for the period in question by virtue of—

(a)a previous application of section 75(3) of that Act, or

(b)paragraph 4(4) of Schedule 11 to the Finance Act 1996 (c. 8) (loan relationships deficit carried forward and treated as expenses of management).

(4)The amount of the qualifying loss is equal to the lesser of—

(a)150% of the related qualifying expenditure, and

(b)such amount as is determined in accordance with sub-paragraph (3) to be an amount which falls to be carried forward as described in sub-paragraph (2)(b).

Amount of life assurance company tax credit

25(1)The amount of the life assurance company tax credit to which a company is entitled for an accounting period is equal to 16% of the amount of the qualifying loss for the period.

(2)The Treasury may by order substitute for the percentage for the time being specified in sub-paragraph (1) such other percentage as they think fit.

(3)An order under sub-paragraph (2) may make such incidental, supplemental, consequential or transitional provision as the Treasury think fit.

Payment in respect of life assurance company tax credit, etc

26Paragraph 16 (payment) and paragraph 18 (tax credit not to be treated as income) shall have effect in relation to life assurance company tax credits with the substitution for each reference to a land remediation tax credit of a reference to a life assurance company tax credit.

Restriction on carrying forward expenses of management

27(1)For the purposes of subsection (3) of section 75 of the Taxes Act 1988 (carrying forward expenses of management and charges on income where they exceed amount of profits from which deductible), the amount which may be carried forward under that subsection for a period in which the company claims a life assurance company tax credit is treated as reduced by the amount of the expenses of management surrendered.

(2)For the purposes of sub-paragraph (1) the amount of the expenses of management surrendered is—

(a)where the maximum amount of life assurance company tax credit was claimed, the whole of the qualifying loss for that period;

(b)where less than the maximum amount was claimed, a corresponding proportion of the qualifying loss for that period.

The “maximum amount” here means the amount specified in paragraph 25(1).

Certain qualifying expenditure excluded for purposes of capital gains

28If in an accounting period—

(a)a company has a qualifying loss, and

(b)by virtue of that qualifying loss, a payment is made to the company in respect of a life assurance company tax credit,

the related qualifying expenditure shall be treated as if it were expenditure excluded for the purposes of capital gains tax under section 39 of the Taxation of Chargeable Gains Act 1992 (c. 12).

Part 5Supplementary provisions

Artificially inflated claims for deduction, relief or tax credit

29(1)To the extent that a transaction is attributable to arrangements entered into wholly or mainly for a disqualifying purpose, it shall be disregarded in determining for an accounting period the amount of—

(a)any deduction for capital expenditure which is allowed under paragraph 1,

(b)any land remediation relief to which a company is entitled under paragraph 12,

(c)any land remediation tax credit to which a company is entitled under paragraph 14,

(d)any relief to which a company carrying on life assurance business is entitled under paragraph 22, and

(e)any life assurance company tax credit to which such a company is entitled under paragraph 24.

(2)Arrangements are entered into wholly or mainly for a “disqualifying purpose” if their main object, or one of their main objects, is to enable a company to obtain—

(a)a deduction for capital expenditure which would not otherwise be allowed or of a greater amount than that which would otherwise be allowed;

(b)land remediation relief to which the company would not otherwise be entitled or of a greater amount than that to which it would otherwise be entitled;

(c)a land remediation tax credit to which it would not otherwise be entitled or of a greater amount than that to which it would otherwise be entitled;

(d)relief under paragraph 22 to which it would not otherwise be entitled or of a greater amount than that to which it would otherwise be entitled; or

(e)a life assurance company tax credit to which it would not otherwise be entitled or of a greater amount than that to which it would otherwise be entitled.

(3)In this paragraph “arrangements” includes any scheme, agreement or understanding, whether or not legally enforceable.

Funding of tax credits

30Section 10 of the Exchequer and Audit Departments Act 1866 (c. 39) (gross revenues to be paid to Exchequer) shall be construed as allowing the Commissioners of Inland Revenue to deduct payments for or in respect of—

(a)land remediation tax credits, and

(b)life assurance company tax credits,

before causing the gross revenues of their department to be paid to the accounts mentioned in that section.

Interpretation

31(1)In this Schedule—

  • “harm” means—

    (a)

    harm to the health of living organisms,

    (b)

    interference with the ecological systems of which any living organisms form part,

    (c)

    offence to the senses of human beings, or

    (d)

    damage to property;

  • “the Inland Revenue” means any officer of the Board;

  • “insurance company” has the same meaning as it has in Chapter 1 of Part 12 of the Taxes Act 1988;

  • “land” means any estate, interest or rights in or over land;

  • “life assurance business” has the same meaning as it has in Chapter 1 of Part 12 of the Taxes Act 1988;

  • “national insurance contributions” means contributions under Part 1 of the Social Security Contributions and Benefits Act 1992 (c. 4) or Part 1 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (c. 7);

  • “pollution of controlled waters” means the entry into controlled waters of any poisonous, noxious or polluting matter or any solid waste matter;

  • “qualifying loss” has the meaning given in paragraph 24;

  • “qualifying land remediation loss” has the meaning given in paragraph 14;

  • “Schedule A loss” has the meaning given by section 392A of the Taxes Act 1988; and

  • “substance” means any natural or artificial substance, whether in solid or liquid form or in the form of a gas or vapour.

(2)In this Schedule “controlled waters”—

(a)in relation to England and Wales, has the same meaning as in Part 3 of the Water Resources Act 1991 (c. 57);

(b)in relation to Scotland, has the same meaning as in section 30A of the Control of Pollution Act 1974 (c. 40);

(c)in relation to Northern Ireland, means water in waterways and underground strata (as defined in Article 2(2) of the Water (Northern Ireland) Order 1999 (S.I. 1999/662 (N.I. 6)) ).

(3)For the purposes of this Schedule, a person has a relevant connection to a company in a case where the company’s land is in a contaminated state wholly or partly as a result of any thing done or omitted to be done by the person if—

(a)he is or was connected to the company when any such thing is or was done, or omitted to be done, by him,

(b)he is or was connected to the company at the time when the land in question is or was acquired by the company, or

(c)he is or was connected to the company at any time when relevant land remediation is or was undertaken by the company (whether directly or on its behalf).

(4)Section 839 of the Taxes Act 1988 (connected persons) applies for the purposes of this Schedule.

Transitional provisions

32(1)This Schedule does not apply to expenditure incurred before the day on which this Act is passed.

(2)For this purpose no account shall be taken of section 401 of the Taxes Act 1988 (earlier expenditure treated as incurred when Schedule A business or trading begins).

Section 70.

SCHEDULE 23Land remediation: consequential amendments

Computation under Schedule A

1In section 21A of the Taxes Act 1988 (profits of Schedule A business computed in same way as for Case I of Schedule D trade), after subsection (4) (rules in Chapter 5 of Part 4 of the Taxes Act 1988 relating to trade within Case I of Schedule D not applying to Schedule A business) insert—