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Finance (No. 2) Act 1945

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This is the original version (as it was originally enacted).

FOURTH SCHEDULEIncome Tax Reliefs in Connection with Redundancy Schemes

Part IPreliminary

1(1)In this Schedule—

(a)the expression " scheme " means a scheme which is for the time being certified or has at any time been certified by the Board of Trade under section twenty-five of the Finance Act, 1935 ;

(b)the expression " payment " means a payment made under a scheme on or after the sixth day of April, nineteen hundred and forty-five, being a payment made to a person carrying on a trade to which the scheme relates ;

(c)the expression " the person chargeable " means, in relation to any such payment, the person liable to pay any income tax which may fall to be paid by reason of the receipt of the payment;

(d)the expression " damage " includes any loss, liability, expense or other burden, and references to the amount of any damage are references to the sum which would be fair compensation for that damage ;

(e)the expression " contribution " includes part of a contribution, but does not include any contribution made before the sixth day of April, nineteen hundred and forty-five, and the expression " deductible contribution " means a contribution allowed to be deducted under the said section twenty-five, any reduction thereof under Part III of this Schedule being left out of account; and

(f)the expression " asset " includes a part of an asset.

(2)Subsection (5) of the said section twenty-five (which relates to the order in which contributions are to be deemed to be repaid) shall have effect for the purposes of this Schedule as it has effect for the purposes of that section.

Part IIRelief in respect of certain payments

2The question whether any, and, if so, what, relief is to be given shall be determined separately in relation to each payment made under the scheme in respect of the trade, but for the purpose of determining that question regard shall be had, as hereinafter provided, to the sum (hereafter in this Schedule referred to as " the total payment,") produced by adding the amount of the payment to the amount of any payments previously so made.

3No relief shall be given in respect of the payment unless the person chargeable shows—

(a)the amount of the damage in respect of which the total payment has been made; and

(b)how much of that amount is referable to damage in respect of which no relief may be given under the Income Tax Acts.

4No relief shall be given in respect of the payment unless the total payment, or the amount of the damage in respect of which the total payment has been made, whichever is the smaller, exceeds the aggregate amount of the deductible contributions which have been paid in furtherance of the scheme in respect of the trade in question before the payment is made, exclusive of any contributions which have been repaid before the payment is made.

5The amount of the reduction to be made in respect of the payment shall be arrived at by—

(a)ascertaining the sum which bears to the excess mentioned in paragraph 4 of this Schedule the same proportion that the amount mentioned in sub-paragraph (b) of paragraph 3 thereof bears to the amount mentioned in sub-paragraph (a) of the said paragraph 3 ; and

(b)deducting from the said sum the total amount of any reductions which have been or fall to be made under this Schedule in respect of payments previously made under the scheme in respect of the trade.

6(1)For the purposes of this Schedule, damage shall be deemed to be damage in respect of which relief may be given under the Income Tax Acts if and only if—

(a)the damage is attributable to any of the following events, that is to say, the demolition, destruction or putting out of use of any asset, or the disposition or termination of an interest in any asset, and, by reason of that event, an allowance falls to be made under Part I or Part II of the Income Tax Act, 1945, in charging the profits or gains of the trade ; or

(b)the damage consists of any loss, liability, expense or other burden in respect of which an allowance may be made in computing the profits or gains of the trade for the purposes of the Income Tax Acts :

Provided that where an allowance under Part I of the Income Tax Act, 1945, in respect of any damage falls to be reduced by the fraction specified in subsection (4) of section three of that Act, the same fraction, and the same fraction only, of the amount of the damage shall be treated as being referable to damage in respect of which relief may be given under the Income Tax Acts.

(2)Where any event occurs which would give rise to an allowance under the Income Tax Acts in respect of any asset in charging or computing the profits or gains of a trade but for any of the following matters, that is to say—

(a)that there are no profits or gains against which the allowance could be made ; or

(b)that account is required to be taken of allowances previously made or deemed to have been made in respect of the asset; or

(c)that account is required to be taken of any sum which falls to be written off the expenditure incurred on the asset for the purpose of determining whether any and if so what allowance may be given by reason of the event; or

(d)that account is required to be taken of any sum falling to be taken into account as sale, insurance, salvage or compensation moneys,

the like consequences shall ensue under this Schedule as if an allowance had fallen to be made by reason of that event.

(3)Where any damage is attributable to a permanent change in the purposes for which an asset is used, or the temporary or permanent putting out of use of an asset, the question whether the damage is damage in respect of which relief may be given under the Income Tax Acts shall be determined as if the damage had been attributable to a sale of the asset on the date upon which the change or putting out of use took place.

Part IIIExclusion of relief in respect of contributions paid after relief has been given under part II of this schedule

7The provisions of this Part of this Schedule shall have effect where—

(a)a contribution is paid under a scheme in respect of a trade ;

and

(b)before the contribution is paid, payments have been made under the scheme to the person carrying on the trade ; and

(c)reductions have been made, under the preceding provisions of this Schedule, in the amounts which, by reason of those payments, are to be treated as trading receipts of the trade.

8There shall be ascertained—

(a)the total amount of the said reductions ; and

(b)the sum by which that total would have been decreased if the contribution, and any previous contributions to which this Part of this Schedule applies, had been paid before any of the payments were made.

9For the purpose of determining what deduction is to be made in respect of the contribution under section twenty-five of the Finance Act, 1935, the contribution shall be deemed to be reduced by the sum specified in sub-paragraph (b) of the last preceding paragraph, but—

(a)for the purpose of the application of that paragraph in relation to contributions subsequently paid under the scheme in respect of the trade, the total amount of the reductions referred to in that paragraph shall be treated as decreased by that sum ; and

(b)for the purpose of the application of paragraph 5 of this Schedule, in relation to payments subsequently made under the scheme in respect of the trade, the total amount of the reductions referred to in the said paragraph 5 shall be treated as decreased by the said sum.

10When two or more contributions are paid at the same time, the provisions of this Part of this Schedule shall have effect as if they were a single contribution.

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