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U.K.

Finance Act 2004

2004 CHAPTER 12

An Act to grant certain duties, to alter other duties, and to amend the law relating to the National Debt and the Public Revenue, and to make further provision in connection with finance.

[22nd July 2004]

Most Gracious Sovereign

WE, Your Majesty’s most dutiful and loyal subjects, the Commons of the United Kingdom in Parliament assembled, towards raising the necessary supplies to defray Your Majesty’s public expenses, and making an addition to the public revenue, have freely and voluntarily resolved to give and to grant unto Your Majesty the several duties hereinafter mentioned; and do therefore most humbly beseech Your Majesty that it may be enacted, and be it enacted by the Queen’s most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—

Modifications etc. (not altering text)

C1Act modified (1.7.2008) (N.I.) (with effect in accordance with reg. 1 of the amending Rule) by The Health and Social Care (Pension Scheme) Regulations (Northern Ireland) 2008 (S.R. 2008/256), reg. 88(1) (with regs. 134, 258)

C2Act modified (1.7.2008) (N.I.) (with effect in accordance with reg. 1 of the amending Rule) by The Health and Social Care (Pension Scheme) Regulations (Northern Ireland) 2008 (S.R. 2008/256), reg. 215(1) (with regs. 134, 258)

Part 1 U.K.Excise duties

Tobacco products dutyU.K.

1Rates of tobacco products dutyU.K.

(1)For the Table of rates of duty in Schedule 1 to the Tobacco Products Duty Act 1979 (c. 7) substitute—

Table
1. CigarettesAn amount equal to 22 per cent of the retail price plus £99.80 per thousand cigarettes.
2. Cigars£145.35 per kilogram.
3. Hand-rolling tobacco£104.47 per kilogram.
4. Other smoking tobacco and chewing tobacco£63.90 per kilogram.

(2)This section shall be deemed to have come into force at 6 o'clock in the evening of 17th March 2004.

Alcoholic liquor dutiesU.K.

2Rate of duty on beerU.K.

(1)In section 36(1AA)(a) of the Alcoholic Liquor Duties Act 1979 (c. 4) (rate of duty on beer) for “£12.22” substitute “ £12.59 ”.

(2)This section shall be deemed to have come into force at midnight on 21st March 2004.

3Rates of duty on wine and made-wineU.K.

(1)For Part 1 of the Table of rates of duty in Schedule 1 to the Alcoholic Liquor Duties Act 1979 (rates of duty on wine and made-wine) substitute—

Part 1 U.K.Wine and made-wine of a strength not exceeding 22 per cent
Description of wine or made-wineRates of duty per hectolitre
 £
Wine or made-wine of a strength not exceeding 4 per cent50.38
Wine or made-wine of a strength exceeding 4 per cent but not exceeding 5.5 per cent69.27
Wine or made-wine of a strength exceeding 5.5 per cent but not exceeding 15 per cent and not sparkling163.47
Sparkling wine or sparkling made-wine of a strength exceeding 5.5 per cent but less than 8.5 per cent166.70
Sparkling wine or sparkling made-wine of a strength of 8.5 per cent or of a strength exceeding 8.5 per cent but not exceeding 15 per cent220.54
Wine or made-wine of a strength exceeding 15 per cent but not exceeding 22 per cent217.95

(2)This section shall be deemed to have come into force at midnight on 21st March 2004.

4Duty stamps for spirits etcU.K.

(1)At the beginning of Part 6 of the Alcoholic Liquor Duties Act 1979 (c. 4) (general control provisions) under the heading “Sale of dutiable alcoholic liquors” insert—

64ARetail containers of certain alcoholic liquors to be stamped

Schedule 2A to this Act (duty stamps) has effect..

(2)Before Schedule 3 to that Act insert the Schedule 2A set out in Schedule 1 to this Act.

(3)In section 12(2) of the Finance Act 1994 (c. 9) (defaults engaging Commissioners' power to assess excise duty to the best of their judgement) after paragraph (c) insert—

(ca)any failure by any person to comply with a requirement to which he is made subject by or under Schedule 2A to the Alcoholic Liquor Duties Act 1979 (duty stamps);.

(4)In section 14(1) of that Act (reviewable decisions) after paragraph (bc) insert—

(bd)any decision by the Commissioners as to whether or not any person is entitled to any repayment or credit by virtue of regulations under paragraph 4(2)(h) of Schedule 2A to the Alcoholic Liquor Duties Act 1979 (duty stamps), or the amount of the repayment or credit to which any person is so entitled;

(be)any decision by the Commissioners made by virtue of regulations under paragraph 4(2)(i) of that Schedule that some or all of a payment made, or security provided, is forfeit, or the amount which is so forfeit;.

(5)The amendments made by this section have effect in relation to retail containers containing alcoholic liquor if the excise duty point for the alcoholic liquor falls on or after such day as the Treasury may by order made by statutory instrument appoint.

(6)An order under subsection (5) may contain such supplemental and transitional provision and savings as the Treasury think fit in connection with the coming into effect of those amendments.

(7)In subsection (5) “excise duty point” has the meaning given by section 1 of the Finance (No. 2) Act 1992 (c. 48).

Hydrocarbon oil etc dutiesU.K.

5RatesU.K.

(1)In section 6 of the Hydrocarbon Oil Duties Act 1979 (c. 5) (hydrocarbon oil: rates of duty)—

(a)in subsection (1A)(a) (ultra low sulphur petrol) for “£0.4710” substitute “ £0.4902 ”,

(b)in subsection (1A)(b) (other light oil) for “£0.5620” substitute “ £0.5790 ”,

(c)in subsection (1A)(c) (ultra low sulphur diesel) for “£0.4710” substitute “ £0.4902 ”, and

(d)in subsection (1A)(d) (other heavy oil) for “£0.5327” substitute “ £0.5487 ”.

(2)In section 6AA(3) of that Act (biodiesel: rate of duty) for “£0.2710” substitute “ £0.2852 ”.

(3)In section 11(1) of that Act (rebate on heavy oil)—

(a)in paragraph (a) (fuel oil) for “£0.0382” substitute “ £0.0624 ”,

(b)in paragraph (b) (gas oil: general) for “£0.0422” substitute “ £0.0664 ”, and

(c)in paragraph (ba) (ultra low sulphur diesel) for “£0.0422” substitute “ £0.0664 ”.

(4)In section 13A(1) of that Act (rebate on unleaded petrol) for “£0.0601” substitute “ £0.0620 ”.

(5)In section 14(1) of that Act (rebate on light oil for use as furnace fuel) for “£0.0382” substitute “ £0.0624 ”.

(6)This section shall come into force on 1st September 2004.

Commencement Information

I2S. 5 in force at 1.9.2004, see s. 5(6)

6Road fuel gasU.K.

(1)At the end of section 5 of the Hydrocarbon Oil Duties Act 1979 (road fuel gas) (which becomes subsection (1)) add—

(2)In this Act “natural road fuel gas”is road fuel gas with a methane content of not less than 80%.

(2)For section 8(3) of that Act (rate of duty on road fuel gas) substitute—

(3)The rate of the duty under this section shall be—

(a)in the case of natural road fuel gas, £0.1110 a kilogram, and

(b)in any other case, £0.1303 a kilogram.

(3)After section 21(2) of that Act (regulations) insert—

(2A)In the case of regulations made for the purposes mentioned in subsection (1)(c) above, different regulations may be made for different classes of road fuel gas.

(4)This section shall come into force on 1st September 2004.

Commencement Information

I3S. 6 in force at 1.9.2004, see s. 6(4)

7Sulphur-free fuelU.K.

(1)For section 1(3A) and (3B) of the Hydrocarbon Oil Duties Act 1979 (descriptions of hydrocarbon oil: ultra low sulphur petrol and unleaded petrol) substitute—

(3A)Ultra low sulphur petrol” means unleaded petrol—

(a)the sulphur content of which does not exceed 0.005 per cent. by weight,

(b)the aromatics content of which does not exceed 35 per cent. by volume, and

(c)which is not sulphur-free petrol.

(3B)Sulphur-free petrol” means unleaded petrol the sulphur content of which does not exceed 0.001 per cent. by weight (or is nil).

(3C)Unleaded petrol” means petrol that contains not more than 0.013 grams of lead per litre of petrol; and petrol is “leaded petrol”if it is not unleaded petrol.

(2)For section 1(6) of that Act (ultra low sulphur diesel) substitute—

(6)Ultra low sulphur diesel” means gas oil—

(a)the sulphur content of which does not exceed 0.005 per cent. by weight,

(b)the density of which does not exceed 835 kilograms per cubic metre at a temperature of 15°C,

(c)of which not less than 95 per cent. by volume distils at a temperature not exceeding 345°C, and

(d)which is not sulphur-free diesel.

(7)Sulphur-free diesel” means gas oil the sulphur content of which does not exceed 0.001 per cent. by weight (or is nil).

F1(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4)For section 2A(1) of that Act (power to amend definitions) substitute—

(1)The Treasury may by order made by statutory instrument amend the definition for the purposes of this Act of—

(a)sulphur-free diesel;

(b)sulphur-free petrol;

(c)ultra low sulphur diesel;

(d)ultra low sulphur petrol;

(e)unleaded petrol and leaded petrol.

(5)In section 6(1A) of that Act (rates of duty)—

(a)after paragraph (a) insert—

(aa)£0.4852 a litre in the case of sulphur-free petrol;,

(b)in paragraph (b) after “other than ultra low sulphur petrol” insert “ and sulphur-free petrol ”,

(c)after paragraph (c) insert—

(ca)£0.4852 a litre in the case of sulphur-free diesel;, and

(d)in paragraph (d) after “other than ultra low sulphur diesel” insert “ and sulphur-free diesel ”.

(6)In section 13AA(6) of that Act (restrictions on use of rebated kerosene) after “which is not ultra low sulphur diesel” insert “ or sulphur-free diesel ”.

(7)In section 13A(1) of that Act (rebate on unleaded petrol) after “, other than ultra low sulphur petrol” insert “ and sulphur-free petrol ”.

(8)In section 27 of that Act (interpretation)—

(a)after the definition of “road vehicle” insert—

sulphur-free diesel” has the meaning given by section 1(7) above;

sulphur-free petrol” has the meaning given by section 1(3B) above;, and

(b)in the definition of “unleaded petrol” and “leaded petrol” for “section 1(3B) above.” substitute “ section 1(3C) above. ”

(9)This section shall come into force on 1st September 2004.

Textual Amendments

F1S. 7(3) omitted (retrospective to 1.4.2008) by virtue of Finance Act 2008 (c. 9), Sch. 5 paras. 25(e)(i), 26(b)

Commencement Information

I4S. 7 in force at 1.9.2004, see s. 7(9)

8Definition of “fuel oil”U.K.

Before section 2A(2) of the Hydrocarbon Oil Duties Act 1979 (c. 5) (power to amend definitions) insert—

(1C)The Treasury may by order made by statutory instrument amend the definition for the purposes of section 11 of “fuel oil”.

9Mixing of rebated oilU.K.

(1)For section 20AAA of the Hydrocarbon Oil Duties Act 1979 (mixing of rebated oil) substitute—

20AAAMixing of rebated oil

(1)A duty of excise shall be charged on a mixture which is—

(a)produced by mixing fully rebated heavy oil with heavy oil which is not fully rebated, and

(b)supplied for use as fuel for any engine, motor or other machinery.

(2)A duty of excise shall be charged on a mixture which is—

(a)produced by mixing partially rebated heavy oil with heavy oil which is not partially rebated, and

(b)supplied for use as fuel for any engine, motor or other machinery;

but a mixture on which duty is charged under subsection (1) shall not be charged under this subsection.

(3)A duty of excise shall be charged on a mixture which is produced by mixing—

(a)fully or partially rebated heavy oil, with

(b)biodiesel or a substance containing biodiesel.

(4)The rate of duty on a mixture under subsection (1) or (2) shall be—

(a)in the case of a mixture supplied for use as fuel for a road vehicle, the rate of duty specified in section 6(1A)(d) (general rate for heavy oil), and

(b)in any other case, equivalent to the rate of rebate specified in section 11(1)(b) (general rate for gas oil).

(5)The rate of duty on a mixture under subsection (3) shall be the rate of duty specified in section 6(1A)(d).

(6)For the purposes of this section—

(a)oil is fully rebated if a rebate has been allowed in respect of it under section 11(1)(c) (general rebate for heavy oil),

(b)oil is partially rebated if a rebate has been allowed in respect of it under any other provision of section 11 or under section 13AA, and

(c)a reference to mixing is a reference to non-approved mixing (within the meaning given by section 20A(5)).

(7)The person liable to pay duty charged under this section on supply or production of a mixture is the person supplying or producing the mixture.

(8)Where duty under a provision of this Act has been paid on an ingredient of a mixture, the duty charged under this section shall be reduced by the amount of any duty that the Commissioners are satisfied has been paid on the ingredient (but not to a negative amount).

(9)The Commissioners may exempt a person from liability to pay duty under any provision of this Act in respect of production or supply of a mixture of a kind described in subsection (1)(a), (2)(a) or (3) if satisfied that—

(a)the liability was incurred accidentally, and

(b)in the circumstances the person should be exempted.

(2)In section 20AAB of that Act (mixing of rebated oil: supplementary)—

(a)for subsections (1) and (2) substitute—

(1)A person who supplies or produces a mixture on which duty is charged under section 20AAA above must notify the Commissioners of the supply or production—

(a)in advance, or

(b)within the period of seven days beginning with the date of supply or production., and

(b)in subsection (3) omit “or (2)”.

(3)Schedule 2A to that Act shall cease to have effect.

(4)This section—

(a)in so far as it imposes or relates to the charge specified in section 20AAA(1) or (2) of that Act (as substituted by subsection (1) above), shall have effect in relation to anything supplied on or after the date on which this Act is passed,

(b)in so far as it imposes or relates to the charge specified in section 20AAA(3) of that Act (as substituted by subsection (1) above), shall have effect in relation to anything produced on or after the date on which this Act is passed, and

(c)in so far as it causes sections 20AAA and 20AAB(1) and (2) of, and Schedule 2A to, that Act to cease to have effect in their present form, shall come into force on the day on which this Act is passed.

(5)But no duty shall be charged on the supply of a mixture under section 20AAA(1) or (2) of that Act (as substituted by subsection (1) above) if duty was charged on the production of the mixture under section 20AAA as it had effect before the date on which this Act is passed.

10BioethanolU.K.

(1)After section 2AA of the Hydrocarbon Oil Duties Act 1979 (c. 5) (biodiesel) insert—

2ABBioethanol

(1)In this Act “bioethanol” means a liquid fuel—

(a)consisting of ethanol produced from biomass, and

(b)capable of being used for the same purposes as light oil.

(2)In subsection (1)—

(a)liquid” does not include any substance that is gaseous at a temperature of 15°C and under a pressure of 1013.25 millibars, and

(b)biomass” means vegetable and animal substances constituting the biodegradable fraction of—

(i)products, wastes and residues from agriculture, forestry and related activities, or

(ii)industrial and municipal waste.

(3)A substance shall be treated as falling within subsection (1)(a) if it—

(a)is denatured alcohol for the purposes of section 5 of the Finance Act 1995 (c. 4), and

(b)would fall within subsection (1)(a) above (without reliance on this subsection) but for the presence of a component introduced—

(i)for the purpose of rendering the substance denatured alcohol, and

(ii)in the minimum proportion necessary for that purpose.

F2(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3)After section 6AC of that Act (biodiesel: application of provisions relating to hydrocarbon oil) insert—

6ADExcise duty on bioethanol

(1)A duty of excise shall be charged on the setting aside for a chargeable use by any person, or (where it has not already been charged under this section) on the chargeable use by any person, of bioethanol.

(2)In subsection (1) “chargeable use” means use—

(a)as fuel for any engine, motor or other machinery,

(b)as an additive or extender in any substance so used, or

(c)for the production of bioethanol blend.

(3)The rate of duty under this section shall be £0.2852 a litre.

6AEExcise duty on blends of bioethanol and hydrocarbon oil

(1)A duty of excise shall be charged on bioethanol blend—

(a)imported into the United Kingdom, or

(b)produced in the United Kingdom and delivered for home use from a refinery or other premises used for the production of hydrocarbon oil or from any bonded storage for hydrocarbon oil, not being bioethanol blend chargeable with duty under paragraph (a) above.

(2)In this Act “bioethanol blend” means any mixture that is produced by mixing—

(a)bioethanol, and

(b)hydrocarbon oil not charged with excise duty.

(3)The rate at which the duty shall be charged on any bioethanol blend shall be a composite rate representing—

(a)in respect of the proportion of the blend that is hydrocarbon oil, the rate that would be applicable to the blend if it consisted entirely of hydrocarbon oil of the description that went into producing the blend, and

(b)in respect of the proportion of the blend that is bioethanol, the rate that would be applicable to the blend if it consisted entirely of bioethanol.

(4)A reference in subsection (3) to a proportion is to a proportion by volume to the nearest 0.001%.

(5)If the Commissioners are not satisfied as to the proportion of bioethanol in any bioethanol blend, the rate of duty chargeable shall be the rate that would be applicable to the blend if it consisted entirely of hydrocarbon oil of the description that went into producing the blend.

(6)Where imported bioethanol blend is removed to a refinery, the duty chargeable under subsection (1) above shall, instead of being charged at the time of the importation of the blend, be charged on the delivery of any goods from the refinery for home use and shall be the same as that which would be payable on the importation of like goods.

6AFApplication to bioethanol and bioethanol blend of provisions relating to hydrocarbon oil

(1)The Commissioners may by regulations provide for—

(a)references in this Act, or specified references in this Act, to hydrocarbon oil to be construed as including references to—

(i)bioethanol;

(ii)bioethanol blend;

(b)references in this Act, or specified references in this Act, to duty on hydrocarbon oil to be construed as including references to duty under—

(i)section 6AD above;

(ii)section 6AE above;

(c)bioethanol, or bioethanol blend, to be treated for the purposes of such of the following provisions of this Act as may be specified as if it fell within a specified description of hydrocarbon oil.

(2)Where the effect of provision made under subsection (1) above is to extend any power to make regulations, provision made in exercise of the power as extended may be contained in the same statutory instrument as the provision extending the power.

(3)In this section “specified” means specified by regulations under this section.

(4)Regulations under this section may make different provision for different cases.

(5)Paragraph (b) of subsection (1) above shall not be taken as prejudicing the generality of paragraph (a) of that subsection.

(4)In section 6A(1) of that Act (fuel substitutes) for “which is not hydrocarbon oil, biodiesel or bioblend” substitute which is not—

(a)hydrocarbon oil,

(b)biodiesel,

(c)bioblend,

(d)bioethanol, or

(e)bioethanol blend.

(5)At the end of section 11(6) of that Act (rebate on heavy oil: exception) add “ or bioethanol blend ”.

(6)At the end of section 13AA of that Act (restrictions on use of rebated kerosene) add—

(7)Nothing in this section has the effect of allowing a rebate on bioblend or bioethanol blend.

(7)In section 14 of that Act (rebate on light oil for use as furnace fuel) after subsection (1) insert—

(1A)No rebate shall be allowed under this section in respect of bioethanol blend.

(8)In section 22 of that Act (prohibition on use of petrol substitutes on which duty has not been paid)—

(a)after subsection (1AA) insert—

(1AB)Where any person—

(a)puts any bioethanol to a chargeable use (within the meaning of section 6AD above), and

(b)knows or has reasonable cause to believe that there is duty charged under section 6AD above on that bioethanol which has not been paid and is not lawfully deferred,

his putting the bioethanol to that use shall attract a penalty under section 9 of the Finance Act 1994 (c. 9) (civil penalties), and any goods in respect of which a person contravenes this section shall be liable to forfeiture., and

(b)in subsection (1A) for “subsection (1) or (1AA) above.” substitute “ subsection (1), (1AA) or (1AB) above. ”

(9)In section 27(1) of that Act (interpretation) after the definition of “biodiesel” insert—

bioethanol” has the meaning given by section 2AB above;

bioethanol blend” has the meaning given by section 6AE(2) above;.

(10)This section shall come into force on 1st January 2005.

(11)But no duty shall be charged under section 6AD or 6AE of that Act (inserted by subsection (3) above) in respect of the chargeable use of any goods, or the setting aside of any goods for a chargeable use, if before 1st January 2005—

(a)the goods were used or set aside for a chargeable use within the meaning of section 6A of that Act, and

(b)a duty of excise was charged under that section on that use or setting aside.

Textual Amendments

F2S. 10(2) omitted (retrospective to 1.4.2008) by virtue of Finance Act 2008 (c. 9), Sch. 5 paras. 25(e)(ii), 26(b)

Commencement Information

I5S. 10 in force at 1.1.2005, see s. 10(10)

11BiodieselU.K.

(1)In section 6AA(2) of the Hydrocarbon Oil Duties Act 1979 (c. 5) (excise duty on biodiesel) after paragraph (b) add—

(c)for the production of bioblend.

(2)This section shall come into force on 1st January 2005.

Commencement Information

I6S. 11 in force at 1.1.2005, see s. 11(2)

12Fuel substitutesU.K.

(1)For section 6A(2)(b) of the Hydrocarbon Oil Duties Act 1979 (fuel substitutes: additives and extenders) substitute—

(b)as an additive or extender in any substance so used.

(2)This section shall have effect in relation to anything done on or after the date on which this Act is passed.

13WarehousingU.K.

After section 23B of the Hydrocarbon Oil Duties Act 1979 (regulation of traders in controlled oil) insert—

23CWarehousing

(1)For the purposes of Part VIII of the Customs and Excise Management Act 1979 (c. 2) (warehousing) the substances specified in subsection (4) shall be treated as if they were chargeable with duty (and therefore within the scope of section 92(1)(a) or (c) of that Act) whether or not duty is in fact chargeable.

(2)The Commissioners may make regulations under section 93 of that Act (warehousing regulations) that relate to a substance specified in subsection (4).

(3)In respect of a substance specified in subsection (4) which has been or is to be deposited in an excise warehouse by virtue of subsection (2), the Commissioners may—

(a)treat the substance, or make provision by regulations for treating the substance, as if duty were chargeable in relation to it by virtue of a specified enactment;

(b)make any regulations, or do any other thing, of a kind that they could make or do (whether or not by virtue of a provision of Part VIII of that Act) in respect of a substance deposited in an excise warehouse under Part VIII of that Act.

(4)The substances referred to in subsection (1) are—

(a)petroleum gas,

(b)animal fat set aside for use as motor fuel or heating fuel,

(c)vegetable fat set aside for use as motor fuel or heating fuel,

(d)non-synthetic methanol set aside for use as motor fuel or heating fuel,

(e)biodiesel,

(f)a mixture of two or more substances specified in paragraphs (a) to (e), and

(g)any other substance specified for the purposes of this section in regulations made by the Commissioners.

(5)In subsection (4)—

(a)petroleum gas” means any hydrocarbon which—

(i)is gaseous at a temperature of 15°C and under a pressure of 1013.25 millibars, and

(ii)is not natural gas (as defined in paragraph (b) below),

(b)natural gas” means gas with a methane content of not less than 80%,

(c)animal fat” means a triglyceride of animal origin,

(d)vegetable fat” means a triglyceride of vegetable origin, and

(e)non-synthetic methanol” means methyl alcohol of non-synthetic origin.

(6)Regulations under subsection (4)(g)—

(a)may make provision only if the Commissioners think it necessary or expedient for a purpose connected with Council Directive 92/12/EEC on the general arrangements for products subject to excise duty and on the holding, movement and monitoring of such products,

(b)may, in particular, make provision by reference to that Directive or any other [F3EU] instrument, and

(c)may, in particular, make provision by reference to the purpose for which a substance is intended to be used.

Textual Amendments

14Treatment of certain energy productsU.K.

(1)Section 10 of the Finance Act 1993 (c. 34) (application of Hydrocarbon Oil Duties Act 1979 to certain substances) shall be amended as follows.

(2)In subsection (1) for “mineral oil” substitute “ energy product ”.

(3)In subsection (2)—

(a)after “as the equivalent of hydrocarbon oil” insert “ or road fuel gas ”, and

(b)for “as if it fell within such description of hydrocarbon oil” substitute “ as if it fell within such class or description of substance ”.

(4)In subsection (3)—

(a)for “a mineral oil” substitute “ an energy product ”, and

(b)for “hydrocarbon oil of the description” substitute “ the substance ”.

(5)For subsection (4) substitute—

(4)In this section “energy product” means a substance which—

(a)is an energy product for the purposes of Council Directive 2003/ 96/EC restructuring the Community framework for the taxation of energy products and electricity, and

(b)is not (apart from as a result of this section) hydrocarbon oil or road fuel gas within the meaning of the 1979 Act.

(6)For subsection (6) substitute—

(6)Where a duty of excise is charged on a substance under a provision of the 1979 Act by virtue of an order under this section, no duty shall be charged on the substance under any other provision of that Act.

(7)For the heading substitute “ Extension of Hydrocarbon Oil Duties Act 1979 to energy products ”.

Betting and gaming dutiesU.K.

15General betting duty: pool bettingU.K.

(1)The Betting and Gaming Duties Act 1981 (c. 63) shall be amended as follows.

(2)For section 4 (pool betting, the Tote, &c.) substitute—

4Pool betting on horse and dog races

(1)General betting duty shall be charged on pool betting which—

(a)relates only to horse racing or dog racing, and

(b)is not on-course betting.

(2)But subsection (1) does not apply to pool betting if—

(a)the promoter is outside the United Kingdom, and

(b)it is conducted otherwise than by means of a totalisator situated in the United Kingdom.

(3)The amount of duty charged under subsection (1) 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 the period.

(3)In section 5(7) (net stake receipts) and section 5B(4) (liability to pay) for “section 4(1) to (3)” substitute “ section 4(1) ”.

(4)In section 7B (conditions for charging pool betting duty)—

(a)in subsection (2)(b) omit “the bet is made otherwise than by means of a totalisator and”, and

(b)for subsection (3)(a) and (b) substitute—

(a)made wholly in relation to horse racing or dog racing,.

(5)In section 9(2)(a) (prohibitions for protection of revenue)—

(a)at the end of sub-paragraph (i) add “ or ”, and

(b)in sub-paragraph (ii) for “in the case of bets made otherwise than by means of a totalisator,” substitute “ in any case, ”.

(6)In section 10(2) (definition of pool betting) for the definition of “totalisator odds” substitute—

totalisator odds” means the odds paid on bets made—

(a)by means of a totalisator, and

(b)at the scene of the event to which the bets relate.

(7)In section 12(4) (interpretation)—

(a)for the definition of “bookmaker” substitute—

bookmaker” means a person who—

(a)carries on the business of receiving or negotiating bets or conducting pool betting operations (whether as principal or agent and whether regularly or not), or

(b)holds himself out or permits himself to be held out, in the course of a business, as a person within paragraph (a);;

(b)for the definition of “on-course bet” substitute—

on-course bet” has the meaning given by subsection (4A);, and

(c)omit the definition of “sponsored pool betting”.

(8)After section 12(4) insert—

(4A)A bet is an on-course bet for the purposes of this Part of this Act if it—

(a)is made by a person present at a horse or dog race meeting or by a bookmaker,

(b)is not made through an agent of an individual making the bet or though an intermediary, and

(c)is made—

(i)with a bookmaker present at the meeting, or

(ii)by means of a totalisator situated in the United Kingdom, using facilities provided at the meeting by or by arrangement with the person operating the totalisator.

(9)In paragraph 10(1) of Schedule 1 (betting duties: power of entry) omit the words “, or that facilities for sponsored pool betting on those events are being or are to be provided,”.

(10)The amendments made by this section have effect in relation to accounting periods ending on or after the date of the passing of this Act.

16Rates of gaming dutyU.K.

(1)For the Table in section 11(2) of the Finance Act 1997 (c. 16) (rates of gaming duty) substitute—

Table
Part of gross gaming yieldRate
The first £516,5002.5 per cent.
The next £1,146,50012.5 per cent.
The next £1,146,50020 per cent.
The next £2,007,50030 per cent.
The remainder40 per cent.

(2)This section has effect in relation to accounting periods beginning on or after 1st April 2004.

Amusement machine licence dutyU.K.

17Amusement machine licence duty: ratesU.K.

(1)In section 23 of the Betting and Gaming Duties Act 1981 (c. 63) (amount of duty payable on amusement machine licence) for the Table in subsection (2) substitute—

Table
(1)(2)(3)(4)(5)(6)
Period (in months) for which licence grantedCategoryCategoryCategoryCategoryCategory
 ABCDE
 £££££
1308085170230
250155165330445
375225245480650
495295315625845
51203553807551,020
61404104458751,185
71604655009901,340
81855155551,0951,480
92055606001,1901,610
102256006451,2751,725
112406356801,3501,825
122506657151,4151,915

(2)This section has effect in relation to any amusement machine licence for which an application is received by the Commissioners of Customs and Excise on or after 22nd March 2004.

Vehicle excise dutyU.K.

18Fee for payment of duty by credit cardU.K.

(1)The Vehicle Excise and Registration Act 1994 (c. 22) is amended as follows.

(2)After section 19B insert—

19CFee for payment of duty by credit card

(1)This section applies where—

(a)a person applies for a vehicle licence or a trade licence, and

(b)the Secretary of State, or an authorised body, accepts a credit card payment in respect of the duty payable on the licence.

(2)Before issuing the licence, the Secretary of State, or the authorised body, shall require—

(a)the applicant, or

(b)a person acting on behalf of the applicant,

to pay to him, or it, such fee (if any) in respect of the acceptance of the credit card payment as may be prescribed by, or determined in accordance with, regulations.

(3)In cases of such descriptions as the Secretary of State may, with the consent of the Treasury, determine, the whole or a part of a fee paid under this section may be refunded.

(4)In this section—

  • authorised body” means a body (other than a Northern Ireland department) which is authorised by the Secretary of State to act as his agent for the purpose of issuing licences;

  • “credit card” has such meaning as may be prescribed by regulations;

  • regulations” means regulations made by the Secretary of State..

(3)In section 58 (fees prescribed by regulations) in subsection (1) (fees prescribed by regulations under certain provisions to be of amount approved by Treasury) for “or 14(4)(b)” substitute “ , 14(4)(b) or 19C(2) ”.

(4)This section has effect in relation to licences issued on or after such day as the Secretary of State may by order made by statutory instrument appoint.

Part 2 U.K.Value added tax

19Disclosure of VAT avoidance schemesU.K.

(1)Schedule 2 (which relates to the disclosure of schemes for the avoidance of value added tax) has effect.

(2)Subsection (1) and that Schedule—

(a)come into force on the passing of this Act, so far as is necessary for enabling the making of any orders or regulations by virtue of that Schedule, and

(b)otherwise, come into force on such day as the Treasury may by order made by statutory instrument appoint.

Commencement Information

I8S. 19 wholly in force at 1.8.2004; s. 19 in force for specified purposes at Royal Assent, see s. 19(2); s. 19 in force otherwise at 1.8.2004 by S.I. 2004/1934, art. 2

20GroupsU.K.

(1)After section 43A of the Value Added Tax Act 1994 (c. 23) (groups: eligibility) insert—

43AAPower to alter eligibility for grouping

(1)The Treasury may by order provide for section 43A to have effect with specified modifications in relation to a specified class of person.

(2)An order under subsection (1) may, in particular—

(a)make provision by reference to generally accepted accounting practice;

(b)define generally accepted accounting practice for that purpose by reference to a specified document or instrument (and may provide for the reference to be read as including a reference to any later document or instrument that amends or replaces the first);

(c)adopt any statutory or other definition of generally accepted accounting practice (with or without modification);

(d)make provision by reference to what would be required or permitted by generally accepted accounting practice if accounts, or accounts of a specified kind, were prepared for a person.

(3)An order under subsection (1) may also, in particular, make provision by reference to—

(a)the nature of a person;

(b)past or intended future activities of a person;

(c)the relationship between a number of persons;

(d)the effect of including a person within a group or of excluding a person from a group.

(4)An order under subsection (1) may—

(a)make provision which applies generally or only in specified circumstances;

(b)make different provision for different circumstances;

(c)include supplementary, incidental, consequential or transitional provision.

(2)After section 43C of that Act insert—

43DGroups: duplication

(1)A body corporate may not be treated as a member of more than one group at a time.

(2)A body which is a member of one group is not eligible by virtue of section 43A to be treated as a member of another group.

(3)If—

(a)an application under section 43B(1) would have effect from a time in accordance with section 43B(4), but

(b)at that time one or more of the bodies specified in the application is a member of a group (other than that to which the application relates),

the application shall have effect from that time, but with the exclusion of the body or bodies mentioned in paragraph (b).

(4)If—

(a)an application under section 43B(2)(a) would have effect from a time in accordance with section 43B(4), but

(b)at that time the body specified in the application is a member of a group (other than that to which the application relates),

the application shall have no effect.

(5)Where a body is a subject of two or more applications under section 43B(1) or (2)(a) that have not been granted or refused, the applications shall have no effect.

(3)In section 43(1) of that Act (effect of treatment as group) for “sections 43A to 43C” substitute “ sections 43A to 43D ”.

(4)In section 43B(1), (2)(a), (5)(a) and (5)(b) and section 43C(3)(b) of that Act (groups: applications for membership and termination of membership) for “under section 43A(1)” substitute “ by virtue of section 43A ”.

(5)In section 97(4) of that Act (orders, &c.: affirmative resolution) after paragraph (c) insert—

(ca)an order under section 43AA(1) if as a result of the order any bodies would cease to be eligible to be treated as members of a group;.

21Reverse charge on gas and electricity supplied by persons outside UKU.K.

(1)After section 9 of the Value Added Tax Act 1994 (c. 23) insert—

9AReverse charge on gas and electricity supplied by persons outside the United Kingdom

(1)This section applies if relevant goods are supplied—

(a)by a person who is outside the United Kingdom,

(b)to a person who is registered under this Act,

for the purposes of any business carried on by the recipient.

(2)The same consequences follow under this Act (and particularly so much as charges VAT on a supply and entitles a taxable person to credit for input tax) as if—

(a)the recipient had himself supplied the relevant goods in the course or furtherance of his business, and

(b)that supply were a taxable supply.

(3)But supplies which are treated as made by the recipient under subsection (2) are not to be taken into account as supplies made by him when determining any allowance of input tax in his case under section 26(1).

(4)In applying subsection (2) the supply of relevant goods treated as made by the recipient shall be assumed to have been made at a time to be determined in accordance with regulations prescribing rules for attributing a time of supply in cases to which this section applies.

(5)Relevant goods” means gas supplied through the natural gas distribution network, and electricity.

(6)Whether a person is outside the United Kingdom is to be determined in accordance with an order made by the Treasury.

(2)This section has effect in relation to supplies made on or after 1st January 2005.

22Use of stock in trade cars for consideration less than market valueU.K.

(1)The Value Added Tax Act 1994 (c. 23) is amended as follows.

(2)In Schedule 6 (valuation: special cases) after paragraph 1 (supply to connected person at less than market value etc) insert—

1A(1)Where—

(a)the value of a supply made by a taxable person for a consideration is (apart from this sub-paragraph) less than its open market value,

(b)the taxable person is a motor manufacturer or motor dealer,

(c)the person to whom the supply is made is—

(i)an employee of the taxable person,

(ii)a person who, under the terms of his employment, provides services to the taxable person, or

(iii)a relative of a person falling within sub-paragraph (i) or (ii) above,

(d)the supply is a supply of services by virtue of sub-paragraph (4) of paragraph 5 of Schedule 4 (business goods put to private use etc),

(e)the goods mentioned in that sub-paragraph consist of a motor car (whether or not any particular motor car) that forms part of the stock in trade of the taxable person, and

(f)the supply is not one to which paragraph 1 above applies,

the Commissioners may direct that the value of the supply shall be taken to be its open market value.

(2)A direction under this paragraph shall be given by notice in writing to the person making the supply, but no direction may be given more than 3 years after the time of the supply.

(3)A direction given to a person under this paragraph in respect of a supply made by him may include a direction that the value of any supply—

(a)which is made by him after the giving of the notice, or after such later date as may be specified in the notice, and

(b)as to which the conditions in paragraphs (a) to (f) of sub-paragraph (1) above are satisfied,

shall be taken to be its open market value.

(4)In this paragraph—

  • motor car” means any motor vehicle of a kind normally used on public roads which has three or more wheels and either—

    (a)

    is constructed or adapted solely or mainly for the carriage of passengers, or

    (b)

    has to the rear of the driver’s seat roofed accommodation which is fitted with side windows or which is constructed or adapted for the fitting of side windows,

    but does not include any vehicle excluded by sub-paragraph (5) below;

  • motor dealer” means a person whose business consists in whole or in part of obtaining supplies of, or acquiring from another member State or importing, new or second-hand motor cars for resale with a view to making an overall profit on the sale of them (whether or not a profit is made on each sale);

  • motor manufacturer” means a person whose business consists in whole or in part of producing motor cars including producing motor cars by conversion of a vehicle (whether a motor car or not);

  • relative” means husband, wife, brother, sister, ancestor or lineal descendant;

  • stock in trade” means new or second-hand motor cars (other than second-hand motor cars which are not qualifying motor cars within sub-paragraph (6) below) which are—

    (a)

    produced by a motor manufacturer or, as the case may require, supplied to or acquired from another member State or imported by a motor dealer, for the purpose of resale, and

    (b)

    intended to be sold—

    (i)

    by a motor manufacturer within 12 months of their production, or

    (ii)

    by a motor dealer within 12 months of their supply, acquisition from another member State or importation, as the case may require,

    and such motor cars shall not cease to be stock in trade where they are temporarily put to a use in the motor manufacturer’s or, as the case may be, the motor dealer’s business which involves making them available for private use.

(5)The vehicles excluded by this sub-paragraph are—

(a)vehicles capable of accommodating only one person;

(b)vehicles which meet the requirements of Schedule 6 to the Road Vehicles (Construction and Use) Regulations 1986 and are capable of carrying twelve or more seated persons;

(c)vehicles of not less than three tonnes unladen weight (as defined in the Table to regulation 3(2) of the Road Vehicles (Construction and Use) Regulations 1986);

(d)vehicles constructed to carry a payload (the difference between—

(i)a vehicle’s kerb weight (as defined in the Table to regulation 3(2) of the Road Vehicles (Construction and Use) Regulations 1986), and

(ii)its maximum gross weight (as defined in that Table)),

of one tonne or more;

(e)caravans, ambulances and prison vans;

(f)vehicles constructed for a special purpose other than the carriage of persons and having no other accommodation for carrying persons than such as is incidental to that purpose.

(6)For the purposes of this paragraph a motor car is a “qualifying motor car”if—

(a)it has never been supplied, acquired from another member State, or imported in circumstances in which the VAT on that supply, acquisition or importation was wholly excluded from credit as input tax by virtue of an order under section 25(7) (as at 17th March 2004 see article 7 of the Value Added Tax (Input Tax) Order 1992); or

(b)a taxable person has elected under such an order for it to be treated as such.

(7)The Treasury may by order amend any of the definitions in this paragraph..

(3)In section 83(v) (appeal to tribunal with respect to any direction under paragraph 1 or 2 of Schedule 6 etc) after “paragraph 1” insert “ , 1A ”.

(4)In section 97 (orders, rules and regulations) in subsection (4) (orders to which the House of Commons affirmative procedure in subsection (3) applies) after paragraph (e) insert—

(f)an order under paragraph 1A(7) of Schedule 6;.

(5)The amendment made by subsection (2) applies in relation to any use or availability for use on or after the appointed day (whatever the date of the directions mentioned in paragraph 5(4) of Schedule 4 to the Value Added Tax Act 1994 (c. 23)).

(6)In subsection (5) “the appointed day” means such day as the Treasury may by order made by statutory instrument appoint.

Part 3U.K.Income tax, corporation tax and capital gains tax

Chapter 1U.K.Income tax and corporation tax charge and rate bands

Income taxU.K.

F423Charge and rates for 2004-05U.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F4S. 23 repealed (with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 3 Pt. 1 (with Sch. 2)

F524Personal allowances for those aged 65 or moreU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F5S. 24 repealed (with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 3 Pt. 1 (with Sch. 2)

Corporation taxU.K.

25Charge and main rate for financial year 2005U.K.

Corporation tax shall be charged for the financial year 2005 at the rate of 30%.

F626Small companies' rate and fraction for financial year 2004U.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F6S. 26 repealed (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 3 Pt. 1 (with Sch. 2)

27Corporation tax starting rate and fraction for financial year 2004U.K.

For the financial year 2004—

(a)the corporation tax starting rate shall be 0%, and

(b)the fraction mentioned in section 13AA of the Taxes Act 1988 (marginal relief for small companies) shall be 19/400ths.

F728The non-corporate distribution rateU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F7S. 28 repealed (with effect in accordance with Sch. 26 Pt. 3(1) Note of the amending Act) by Finance Act 2006 (c. 25), Sch. 26 Pt. 3(1)

TrustsU.K.

F829Special rates of tax applicable to trustsU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F8S. 29 repealed (with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 3 Pt. 1 (with Sch. 2)

Chapter 2U.K.Corporation tax: general

Transfer pricingU.K.

F930Provision not at arm’s length: transactions between UK taxpayers etcU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F9Ss. 30-32 repealed (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 10 Pt. 2 (with Sch. 9 paras. 1-9, 22)

F931Exemptions for dormant companies and small and medium-sized enterprisesU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F9Ss. 30-32 repealed (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 10 Pt. 2 (with Sch. 9 paras. 1-9, 22)

F932Special applications of paragraph 6 of Schedule 28AA to the Taxes Act 1988U.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F9Ss. 30-32 repealed (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 10 Pt. 2 (with Sch. 9 paras. 1-9, 22)

Penalties: temporary relaxationU.K.

33Provision not at arm’s length: temporary relaxation of liability to penaltyU.K.

(1)This section has effect in relation to—

(a)the years of assessment 2004-05 and 2005-06, and

(b)accounting periods beginning on or after 1st January 2004 and ending on or before 31st March 2006,

and in the following provisions of this section “relevant period” means any of those years of assessment or accounting periods.

(2)In this section “records relating to an arm’s length provision” means such records as might have been requisite for the purpose of making and delivering a correct and complete return, so far as relating to the determination of the provision asserted to be the arm’s length provision for the purposes of Schedule 28AA to the Taxes Act 1988 in a case where that Schedule applies.

(3)In relation to any relevant period, the following provisions (which provide for penalties for failure to keep and preserve records for purposes of returns)—

(a)section 12B(5) of the Taxes Management Act 1970 (c. 9), and

(b)paragraph 23 of Schedule 18 to the Finance Act 1998 (c. 36),

do not apply if the records which the person in question fails to keep or preserve are records relating to an arm’s length provision.

(4)In the application of subsection (2) in relation to paragraph 23 of Schedule 18 to the Finance Act 1998—

(a)for “requisite” substitute “ needed ”, and

(b)for “making and delivering” substitute “ delivering ”.

(5)Where a person delivers an incorrect return for any relevant period, he shall not be regarded as doing so negligently for the purposes of—

(a)section 95 of the Taxes Management Act 1970, or

(b)paragraph 20 of Schedule 18 to the Finance Act 1998,

by reason only of his failure, or the failure of any other person, to keep or preserve records relating to an arm’s length provision.

(6)For the purposes of section 95A of the Taxes Management Act 1970, where a partner delivers an incorrect partnership return for any relevant period—

(a)he shall not be regarded as doing so negligently, and

(b)his doing so shall not be regarded as attributable to negligent conduct on the part of any relevant partner,

by reason only of his failure, or the failure of any other person, to keep or preserve records relating to an arm’s length provision.

(7)For the purposes of section 99 of the Taxes Management Act 1970 (penalty for assisting in preparation of incorrect documents) a person shall not be taken to know that a return is incorrect by reason only of his failure, or the failure of any other person, to keep or preserve records relating to an arm’s length provision.

Thin capitalisationU.K.

34Payments of excessive interest etcU.K.

(1)In section 209 of the Taxes Act 1988 (meaning of “distribution”) the following provisions shall cease to have effect—

(a)in subsection (2), paragraph (da) (interest etc in respect of securities where issuing company is 75% subsidiary of holder etc and the interest represents an amount that would not have been paid but for a special relationship etc); and

(b)subsections (8A) to (8F) (application of section 808A(2) to (4) for purposes of paragraph (da) of subsection (2)).

F10(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F10(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F11(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F10S. 34(2)(3) repealed (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 10 Pt. 2 (with Sch. 9 paras. 1-9, 22)

F11S. 34(4) repealed (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 3 Pt. 1 (with Sch. 2 Pts. 1, 2)

F1235Elimination of double counting etcU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F1236Balancing payments and elections to pay tax insteadU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Transfer pricing and thin capitalisation: commencementU.K.

37Commencement and transitional provisionsU.K.

(1)In this section “the amending provisions” means—

(a)sections 30 to 32 (transfer pricing);

(b)sections 34 to 36 (thin capitalisation);

(c)Schedule 5 (provision not at arm’s length: related amendments).

(2)The amendments made by those provisions have effect in relation to chargeable periods beginning on or after 1st April 2004 (whenever the actual provision, within the meaning of Schedule 28AA to the Taxes Act 1988, is or was made or imposed).

(3)Where an accounting period of a company begins before, and ends on or after, 1st April 2004, it shall be assumed for the purposes of the amending provisions, the amendments which they make and subsection (2) that that accounting period (“the straddling period”) consists of two separate accounting periods—

(a)the first beginning with the straddling period and ending with 31st March 2004, and

(b)the second beginning with 1st April 2004 and ending with the straddling period,

and the company’s profits and losses shall be computed accordingly for tax purposes.

(4)Where a period of account of any person within the charge to income tax begins before, and ends on or after, 6th April 2004, it shall be assumed for the purposes of the amending provisions, the amendments which they make and subsection (2) that that period (“the straddling period of account”) consists of two separate periods of account—

(a)the first beginning with the straddling period of account and ending with 5th April 2004, and

(b)the second beginning with 6th April 2004 and ending with the straddling period of account,

and the person’s profits and losses shall be computed accordingly for the purposes of income tax.

Expenses of companies with investment business and insurance companiesU.K.

F1338Expenses of management: companies with investment businessU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F13S. 38 repealed (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 3 Pt. 1 (with Sch. 2 Pts. 1, 2)

F1439Accounting period to which expenses of management are referableU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F14S. 39 repealed (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 3 Pt. 1 (with Sch. 2 Pts. 1, 2)

F1540Expenses of insurance companiesU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F15S. 40 omitted (17.7.2012) by virtue of Finance Act 2012 (c. 14), Sch. 16 para. 247(l)(i)

F1641Related amendments to other enactmentsU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F16S. 41 omitted (17.7.2012) by virtue of Finance Act 2012 (c. 14), Sch. 16 para. 247(l)(i)

42Commencement of sections 38 to 41U.K.

(1)The amendments made by sections 38 to 41 and Schedule 6 have effect for accounting periods beginning on or after 1st April 2004.

(2)This is subject to the transitional provisions in sections 43 and 44 and that Schedule.

43Companies with investment business: transitional provisionsU.K.

(1)Any amount which, apart from this subsection, would have fallen to be treated under the old section 75(3) as if it had been disbursed as expenses of management for the first new accounting period of a company shall instead be treated as if it were expenses of management deductible for that period by virtue of the new section 75(9).

(2)To the extent that any amount was deductible under subsection (1) of section 75 for an old accounting period, the amount shall not again be deductible under that subsection for a new accounting period.

(3)Subsection (2) is without prejudice to the old section 75(3) and the new section 75(9) (carry forward of unrelieved excess to later accounting period).

(4)To the extent that an amount—

(a)was not deductible under section 75(1) by an investment company for any old accounting period, but

(b)would have been deductible under the new section 75(1) for an old accounting period if the amendments made by sections 38 and 39 and Schedule 6 or any order under section 46 (so far as having effect in relation to the first new accounting period) had been in force in relation to that period,

the amount shall be deductible under section 75(1) for the first new accounting period of the company.

(5)Where there is an accounting period that begins before, and ends on or after, 1st April 2004 (“the commencement date”), it shall be assumed, for the purpose of determining the amounts that are deductible for that period under section 75(1) of the Taxes Act 1988, that that accounting period (the “straddling period”) consists of two separate accounting periods—

(a)the first beginning with the straddling period and ending with the day preceding the commencement date, and

(b)the second beginning with the commencement date and ending with the straddling period,

but this is subject to subsection (6).

(6)In the case of an investment company, subsection (5) does not have effect for the purpose of determining the amounts that are deductible for the straddling period under section 75(1) by virtue of—

(a)subsection (3) of the old section 75, or

(b)any provision of the Corporation Tax Acts, apart from section 75 and this section.

(7)Where, for the purposes of section 768B or 768C of the Taxes Act 1988, there is a change in the ownership of a company during the straddling period, then for the purposes of the section in question (and Schedule 28A to that Act), before making any such division as is required by section 768B(4) or 768C(3) of that Act,—

(a)the straddling period shall be divided into two parts in accordance with subsection (5), and

(b)those parts shall be treated in accordance with that subsection as two separate accounting periods, but

(c)subsection (6) shall be disregarded,

and section 768B or 768C of, and Schedule 28A to, the Taxes Act 1988 shall have effect accordingly.

(8)In this section—

  • the commencement date” shall be construed in accordance with subsection (5);

  • investment company” has the same meaning as in Part 4 of the Taxes Act 1988 (see section 130 of that Act);

  • new accounting period” means an accounting period beginning on or after the commencement date;

  • old accounting period” means an accounting period beginning before the commencement date;

  • the new section 75” means section 75 as it has effect in relation to a new accounting period;

  • the old section 75” means section 75 as it has effect (apart from subsection (5) above) in relation to an old accounting period;

  • section 75” means section 75 of the Taxes Act 1988.

F1744Insurance companies: transitional provisionsU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F17S. 44 omitted (17.7.2012) by virtue of Finance Act 2012 (c. 14), Sch. 16 para. 247(l)(ii)

Amounts reversing expenses of management deductedU.K.

45Amounts reversing expenses of management deducted: charge to taxU.K.

F18(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F18(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F18(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F19(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F18S. 45(1)-(3) repealed (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 3 Pt. 1 (with Sch. 2 Pts. 1, 2)

F19S. 45(4) repealed (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 3 Pt. 1 (with Sch. 2)

Power to make consequential amendmentsU.K.

46Power to make consequential amendmentsU.K.

(1)The Treasury may by order make such amendments, repeals or revocations in any enactment (including an enactment amended by this Act) as appear to them to be appropriate in consequence of sections 38 to 40 and 45 and Schedule 6.

(2)The power conferred by subsection (1) to make an order includes power—

(a)to make different provision for different cases, and

(b)to make incidental, consequential, supplemental or transitional provision and savings.

(3)Any order made under this section on or before 31st December 2004 may make provision having effect in relation to accounting periods ending before the date on which the order is made (but not before 1st April 2004).

(4)In this section—

  • enactment” includes an enactment comprised in subordinate legislation;

  • subordinate legislation” has the same meaning as in the Interpretation Act 1978 (c. 30) (see section 21 of that Act).

Insurance companies: miscellaneousU.K.

47Insurance companies etc.U.K.

Schedule 7 to this Act (which makes provision about insurance companies and companies which have ceased to be insurance companies after a transfer of business) shall have effect.

Loan relationships and derivative contractsU.K.

F2048Loan relationships: miscellaneous amendmentsU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F20S. 48 repealed (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 3 Pt. 1 (with Sch. 2 Pts. 1, 2)

49Derivative contracts: miscellaneous amendmentsU.K.

Schedule 9 to this Act (which makes amendments relating to derivative contracts) shall have effect.

Accounting practiceU.K.

F2150Generally accepted accounting practiceU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F21S. 50 repealed (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 424, Sch. 3 Pt. 1 (with Sch. 2)

F2251Use of different accounting practices within a group of companiesU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F22S. 51 repealed (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 425, Sch. 3 Pt. 1 (with Sch. 2)

52Amendment of enactments that operate by reference to accounting practiceU.K.

(1)Schedule 10 makes amendments of provisions of the Tax Acts that operate by reference to accounting practice.

(2)In that Schedule—

  • Part 1 makes amendments relating to loan relationships;

  • Part 2 makes amendments relating to derivative contracts;

  • Part 3 makes amendments relating to intangible fixed assets;

  • Part 4 makes amendments relating to foreign currency accounting.

(3)The amendments have effect in relation to—

(a)periods of account beginning on or after 1st January 2005, F23...

F23(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F23S. 52(3)(b) and word repealed (retrospective to 7.4.2005) by Finance Act 2005 (c. 7), Sch. 4 para. 50, Sch. 11 Pt. 2(7)

53Treatment of expenditure on research and developmentU.K.

(1)Expenditure by a company on research and development, if not of a capital nature, is not prevented from being regarded for tax purposes as deductible in computing profits by reason of the fact that for accounting purposes it is brought into account by the company in determining the value of an intangible asset.

(2)Subsection (1) applies, in particular, for the purposes of—

  • section 82A of the Taxes Act 1988 (deduction of expenditure on research and development),

  • Schedule 20 to the Finance Act 2000 (c. 17) (R&D tax relief),

  • Schedule 12 to the Finance Act 2002 (c. 23) (tax relief for expenditure on research and development), and

  • Schedule 13 to that Act (tax relief for expenditure on vaccine research etc.).

(3)Where expenditure is brought into account by a company for tax purposes in accordance with subsection (1), no deduction may be made in computing for tax purposes the profits of the company in respect of the writing down of so much of the value of an intangible asset as is attributable to that expenditure.

(4)Expenditure shall not be regarded by virtue of subsection (1) as deductible in computing a company’s profits for an accounting period to the extent that—

(a)a deduction has been made in respect of it in computing the company’s profits for a previous accounting period, or

(b)the company has benefited from a tax relief in respect of it for a previous accounting period under any of the provisions specified in subsection (2).

(5)In this section—

  • intangible asset” has the meaning it has for accounting purposes; and

  • research and development” has the meaning given by section 837A of the Taxes Act 1988.

(6)This section shall come into force in accordance with provision made by the Treasury by order made by statutory instrument.

Commencement Information

I10S. 53 in force at 1.1.2005 with effect as specified in art. 2 of the commencing S.I. by S.I. 2004/3268, art. 2

F2454Trading profits etc. from securities: taxation of amounts taken to reservesU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F24S. 54 repealed (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 3 Pt. 1 (with Sch. 2 Pts. 1, 2)

MiscellaneousU.K.

55Duty of company to give notice of coming within charge to corporation taxU.K.

(1)A company must give notice to the Board—

(a)of the beginning of its first accounting period, and

(b)of the beginning of any subsequent accounting period that does not immediately follow the end of a previous accounting period.

(2)The notice required by this section—

(a)must be in writing;

(b)must state when the accounting period began;

(c)must contain such other information as may be prescribed;

(d)may be given to any officer of the Board; and

(e)must be given not later than three months after the beginning of the accounting period.

(3)“Prescribed” in subsection (2)(c) means prescribed by regulations made by the Board.

(4)A company that has a reasonable excuse for failing to give notice as required by this section—

(a)is not to be regarded as having failed to comply with this section until the excuse ceases, and

(b)after the excuse ceases is not to be regarded as having failed to comply with this section if the required notice is given without unreasonable delay after the excuse ceases.

(5)In this section—

(a)accounting period” means an accounting period for the purposes of corporation tax;

(b)company” means a body corporate and does not include an unincorporated association or a partnership; and

(c)the Board” means the Commissioners of Inland Revenue.

(6)In the second column of the Table in section 98 of the Taxes Management Act 1970 (c. 9) (penalty for failure to provide information), at the appropriate place insert— “ section 55 of the Finance Act 2004 ”.

(7)This section applies in relation to accounting periods beginning on or after the day on which this Act is passed.

F2556Relief for community amateur sports clubsU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F25S. 56 repealed (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 3 Pt. 1 (with Sch. 2)

Chapter 3U.K.Construction industry scheme

IntroductionU.K.

57IntroductionU.K.

(1)This Chapter provides for certain payments (see section 60) under construction contracts to be made under deduction of sums on account of tax (see sections 61 and 62).

(2)In this Chapter “construction contract” means a contract relating to construction operations (see section 74) which is not a contract of employment but where—

(a)one party to the contract is a sub-contractor (see section 58); and

(b)another party to the contract (“the contractor”) either—

(i)is a sub-contractor under another such contract relating to all or any of the construction operations, or

(ii)is a person to whom section 59 applies.

(3)In sections 60 and 61 “the contractor” has the meaning given by this section.

(4)In this Chapter—

(a)references to registration for gross payment are to registration under section 63(2),

(b)references to registration for payment under deduction are to registration under section 63(3), and

(c)references to registration under section 63 are to registration for gross payment or registration for payment under deduction.

(5)To the extent that any provision of this Chapter would not, apart from this subsection, form part of the Tax Acts, it shall be taken to form part of those Acts.

58Sub-contractorsU.K.

For the purposes of this Chapter a party to a contract relating to construction operations is a sub-contractor if, under the contract—

(a)he is under a duty to the contractor to carry out the operations, or to furnish his own labour (in the case of a company, the labour of employees or officers of the company) or the labour of others in the carrying out of the operations or to arrange for the labour of others to be furnished in the carrying out of the operations; or

(b)he is answerable to the contractor for the carrying out of the operations by others, whether under a contract or under other arrangements made or to be made by him.

59ContractorsU.K.

(1)This section applies to the following bodies or persons—

(a)any person carrying on a business which includes construction operations;

(b)any public office or department of the Crown (including any Northern Ireland department[F26, the Welsh Assembly Government] and any part of the Scottish Administration);

(c)the Corporate Officer of the House of Lords, the Corporate Officer of the House of Commons[F27, the Scottish Parliamentary Corporate Body and the National Assembly for Wales Commission];

(d)any local authority;

(e)any development corporation or new town commission;

(f)the [F28Homes and Communities Agency];

[F29(fa)the Greater London Authority in the exercise of its functions relating to housing or regeneration or its new towns and urban development functions;]

(g)the Secretary of State if the contract is made by him under section 89 of the Housing Associations Act 1985 (c. 69);

(h)the [F30Regulator of Social Housing], a housing association, a housing trust, Scottish Homes, and the Northern Ireland Housing Executive;

(i)any NHS trust;

(j)any HSS trust;

(k)any such body or person, being a body or person (in addition to those falling within paragraphs (b) to (j)) which has been established for the purpose of carrying out functions conferred on it by or under any enactment, as may be designated as a body or person to which this section applies in regulations made by the Board of Inland Revenue;

(l)a person carrying on a business at any time if—

(i)his average annual expenditure on construction operations in the period of three years ending with the end of the last period of account before that time exceeds £1,000,000, or

(ii)where he was not carrying on the business at the beginning of that period of three years, one-third of his total expenditure on construction operations for the part of that period during which he has been carrying on the business exceeds £1,000,000.

(2)But this section only applies to a body or person falling within subsection (1)(b) to [F31(fa)] or (h) to (k) if—

(a)in any period of three years, that body or person has had an average annual expenditure on construction operations of more than £1,000,000, and

(b)since the condition in paragraph (a) was last satisfied, there have not been three successive years in each of which the body or person has had expenditure on construction operations of less than £1,000,000.

In this subsection “year” means a year ending with 31st March.

(3)Where section 57(2)(b) begins to apply to a person in any period of account by virtue of his falling within subsection (1)(l), it shall continue to apply to him until he satisfies the Board of Inland Revenue that his expenditure on construction operations has been less than £1,000,000 in each of three successive years beginning in or after that period of account.

(4)Where the whole or part of a trade is transferred by a company (“the transferor”) to another company (“the transferee”) and [F32Chapter 1 of Part 22 of the Corporation Tax Act 2010] has effect in relation to the transfer, then in determining for the purposes of this section the amount of expenditure incurred by the transferee—

(a)the whole or, as the case may be, a proportionate part of any expenditure incurred by the transferor at a time before the transfer is to be treated as if it had been incurred at that time by the transferee; and

(b)where only a part of the trade is transferred, the expenditure is to be apportioned in such manner as appears to the Board of Inland Revenue, or on appeal to the [F33tribunal], to be just and reasonable.

(5)In this section—

  • development corporation” has the same meaning as in—

    (a)

    the New Towns Act 1981 (c. 64), or

    (b)

    the New Towns (Scotland) Act 1968 (c. 16);

  • enactment” includes an enactment comprised in an Act of the Scottish Parliament and a provision comprised in Northern Ireland legislation;

  • housing association” has the same meaning as in—

    (a)

    the Housing Associations Act 1985 (c. 69), or

    (b)

    Part 2 of the Housing (Northern Ireland) Order 1992 (S.I. 1992/ 1725 (N.I. 15));

  • housing trust” has the same meaning as in the Housing Associations Act 1985;

  • HSS trust” means a Health and Social Services trust established under the Health and Personal Social Services (Northern Ireland) Order 1991 (S.I. 1991/194 (N.I. 1));

  • new town commission” has the same meaning as in the New Towns Act (Northern Ireland) 1965 (c. 13 (N.I.));

  • NHS trust” means a National Health Service trust—

    (a)

    established under [F34section 25 of the National Health Service Act 2006 or section 18 of the National Health Service (Wales) Act 2006], or

    (b)

    constituted under section 12A of the National Health Service (Scotland) Act 1978 (c. 29).

(6)In this section references to a body or person include references to an office or department.

(7)The Board of Inland Revenue may make regulations amending this section for the purpose of removing references to bodies which have ceased to exist.

[F35(8)This section is subject to section 73A (designated international organisations: exemption from section 59).]

Textual Amendments

F30Words in s. 59(1)(h) substituted (1.4.2010) by Housing and Regeneration Act 2008 (c. 17), s. 325(1), Sch. 9 para. 33; S.I. 2010/862, art. 2 (with Sch.)

F31Word in s. 59(2) substituted (1.4.2012) by Localism Act 2011 (c. 20), s. 240(2), Sch. 19 para. 42(3); S.I. 2012/628, art. 6(i) (with arts. 9, 11, 14, 15, 17)

F32Words in s. 59(4) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 426 (with Sch. 2)

F35S. 59(8) inserted (with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 459 (with Sch. 2)

Modifications etc. (not altering text)

Deductions on account of tax from contract payments to sub-contractorsU.K.

60Contract paymentsU.K.

(1)In this Chapter “contract payment” means any payment which is made under a construction contract and is so made by the contractor (see section 57(3)) to—

(a)the sub-contractor,

(b)a person nominated by the sub-contractor or the contractor, or

(c)a person nominated by a person who is a sub-contractor under another such contract relating to all or any of the construction operations.

(2)But a payment made under a construction contract is not a contract payment if any of the following exceptions applies in relation to it.

(3)This exception applies if the payment is treated as earnings from an employment by virtue of Chapter 7 of Part 2 of the Income Tax (Earnings and Pensions) Act 2003 (c. 1) (agency workers).

(4)This exception applies if the person to whom the payment is made or, in the case of a payment made to a nominee, each of the following persons—

(a)the nominee,

(b)the person who nominated him, and

(c)the person for whose labour (or, where that person is a company, for whose employees' or officers' labour) the payment is made,

is registered for gross payment when the payment is made.

But this is subject to subsections (5) and (6).

(5)Where a person is registered for gross payment as a partner in a firm (see section 64), subsection (4) applies only in relation to payments made under contracts under which—

(a)the firm is a sub-contractor, or

(b)where a person has nominated the firm to receive payments, the person who has nominated the firm is a sub-contractor.

(6)Where a person is registered for gross payment otherwise than as a partner in a firm but he is or becomes a partner in a firm, subsection (4) does not apply in relation to payments made under contracts under which—

(a)the firm is a sub-contractor, or

(b)where a person has nominated the firm to receive payments, the person who has nominated the firm is a sub-contractor.

(7)This exception applies if such conditions as may be prescribed in regulations made by the Board of Inland Revenue for the purposes of this subsection are satisfied; and those conditions may relate to any one or more of the following—

(a)the payment,

(b)the person making it, and

(c)the person receiving it.

(8)For the purposes of this Chapter a payment (including a payment by way of loan) that has the effect of discharging an obligation under a contract relating to construction operations is to be taken to be made under the contract; and if—

(a)the obligation is to make a payment to a person (“A”) within paragraph (a) to (c) of subsection (1), but

(b)the payment discharging that obligation is made to a person (“B”) not within those paragraphs,

the payment is for those purposes to be taken to be made to A.

61Deductions on account of tax from contract paymentsU.K.

(1)On making a contract payment the contractor (see section 57(3)) must deduct from it a sum equal to the relevant percentage of so much of the payment as is not shown to represent the direct cost to any other person of materials used or to be used in carrying out the construction operations to which the contract under which the payment is to be made relates.

(2)In subsection (1) “the relevant percentage” means such percentage as the Treasury may by order determine.

(3)That percentage must not exceed—

(a)if the person for whose labour (or for whose employees' or officers' labour) the payment in question is made is registered for payment under deduction, the percentage which is the basic rate for the year of assessment in which the payment is made, or

(b)if that person is not so registered, the percentage which is the higher rate for that year of assessment.

62Treatment of sums deductedU.K.

(1)A sum deducted under section 61 from a payment made by a contractor—

(a)must be paid to the Board of Inland Revenue, and

(b)is to be treated for the purposes of income tax or, as the case may be, corporation tax as not diminishing the amount of the payment.

(2)If the sub-contractor is not a company a sum deducted under section 61 and paid to the Board is to be treated as being income tax paid in respect of the sub-contractor’s relevant profits.

If the sum is more than sufficient to discharge his liability to income tax in respect of those profits, so much of the excess as is required to discharge any liability of his for Class 4 contributions is to be treated as being Class 4 contributions paid in respect of those profits.

(3)If the sub-contractor is a company—

(a)a sum deducted under section 61 and paid to the Board is to be treated, in accordance with regulations, as paid on account of any relevant liabilities of the sub-contractor;

(b)regulations must provide for the sum to be applied in discharging relevant liabilities of the year of assessment in which the deduction is made;

(c)if the amount is more than sufficient to discharge the sub-contractor’s relevant liabilities, the excess may be treated, in accordance with the regulations, as being corporation tax paid in respect of the sub-contractor’s relevant profits; and

(d)regulations must provide for the repayment to the sub-contractor of any amount not required for the purposes mentioned in paragraphs (b) and (c).

(4)For the purposes of subsection (3) the “relevant liabilities”of a sub-contractor are any liabilities of the sub-contractor, whether arising before or after the deduction is made, to make a payment to the Inland Revenue in pursuance of an obligation as an employer or contractor.

(5)In this section—

(a)the sub-contractor” means the person for whose labour (or for whose employees' or officers' labour) the payment is made;

(b)references to the sub-contractor’s “relevant profits” are to the profits from the trade, profession or vocation carried on by him in the course of which the payment was received;

(c)Class 4 contributions” means Class 4 contributions within the meaning of the Social Security Contributions and Benefits Act 1992 (c. 4) or the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (c. 7).

(6)References in this section to regulations are to regulations made by the Board of Inland Revenue.

(7)Regulations under this section may contain such supplementary, incidental or consequential provision as appears to the Board to be appropriate.

Registration of sub-contractorsU.K.

63Registration for gross payment or for payment under deductionU.K.

(1)If the Board of Inland Revenue are satisfied, on the application of an individual or a company, that the applicant has provided—

(a)such documents, records and information as may be required by or in accordance with regulations made by the Board, and

(b)such additional documents, records and information as may be required by the Inland Revenue in connection with the application,

the Board must register the individual or company under this section.

(2)If the Board are satisfied that the requirements of subsection (2), (3) or (4) of section 64 are met, the Board must register—

(a)the individual or company, or

(b)in a case falling within subsection (3) of that section, the individual or company as a partner in the firm in question,

for gross payment.

(3)In any other case, the Board must register the individual or company for payment under deduction.

64Requirements for registration for gross paymentU.K.

(1)This section sets out the requirements (in addition to that in subsection (1) of section 63) for an applicant to be registered for gross payment.

(2)Where the application is for the registration for gross payment of an individual (otherwise than as a partner in a firm), he must satisfy the conditions in Part 1 of Schedule 11 to this Act.

(3)Where the application is for the registration for gross payment of an individual or a company as a partner in a firm—

(a)the applicant must satisfy the conditions in Part 1 of Schedule 11 to this Act (if an individual) or Part 3 of that Schedule (if a company), and

(b)in either case, the firm itself must satisfy the conditions in Part 2 of that Schedule.

(4)Where the application is for the registration for gross payment of a company (otherwise than as a partner in a firm)—

(a)the company must satisfy the conditions in Part 3 of Schedule 11 to this Act, and

(b)if the Board of Inland Revenue have given a direction under subsection (5), each of the persons to whom any of the conditions in Part 1 of that Schedule applies in accordance with the direction must satisfy the conditions which so apply to him.

(5)Where the applicant is a company, the Board may direct that the conditions in Part 1 of Schedule 11 to this Act or such of them as are specified in the direction shall apply to—

(a)the directors of the company,

(b)if the company is a close company, the persons who are the beneficial owners of shares in the company, or

(c)such of those directors or persons as are so specified,

as if each of them were an applicant for registration for gross payment.

(6)See also section 65(1) (power of Board to make direction under subsection (5) on change in control of company applying for registration etc).

(7)In subsection (5) “director” has the meaning given by section 67 of the Income Tax (Earnings and Pensions) Act 2003 (c. 1).

65Change in control of company registered for gross paymentU.K.

(1)Where it appears to the Board of Inland Revenue that there has been a change in the control of a company—

(a)registered for gross payment, or

(b)applying to be so registered,

the Board may make a direction under section 64(5).

(2)The Board may make regulations requiring the furnishing of information with respect to changes in the control of a company—

(a)registered for gross payment, or

(b)applying to be so registered.

[F36(3)In this section references to a change in the control of a company are references to such a change determined in accordance with section 995 of the Income Tax Act 2007.]

Textual Amendments

F36S. 65(3) substituted (with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 460 (with Sch. 2)

Commencement Information

66Cancellation of registration for gross paymentU.K.

(1)The Board of Inland Revenue may at any time make a determination cancelling a person’s registration for gross payment if it appears to them that—

(a)if an application to register the person for gross payment were to be made at that time, the Board would refuse so to register him,

(b)he has made an incorrect return or provided incorrect information (whether as a contractor or as a sub-contractor) under any provision of this Chapter or of regulations made under it, or

(c)he has failed to comply (whether as a contractor or as a sub-contractor) with any such provision.

(2)Where the Board make a determination under subsection (1), the person’s registration for gross payment is cancelled with effect from the end of a prescribed period after the making of the determination (but see section 67(5)).

(3)The Board of Inland Revenue may at any time make a determination cancelling a person’s registration for gross payment if they have reasonable grounds to suspect that the person—

(a)became registered for gross payment on the basis of information which was false,

(b)has fraudulently made an incorrect return or provided incorrect information (whether as a contractor or as a sub-contractor) under any provision of this Chapter or of regulations made under it, or

(c)has knowingly failed to comply (whether as a contractor or as a sub-contractor) with any such provision.

(4)Where the Board make a determination under subsection (3), the person’s registration for gross payment is cancelled with immediate effect.

(5)On making a determination under this section cancelling a person’s registration for gross payment, the Board must without delay give the person notice stating the reasons for the cancellation.

(6)Where a person’s registration for gross payment is cancelled by virtue of a determination under subsection (1), the person must be registered for payment under deduction.

(7)Where a person’s registration for gross payment is cancelled by virtue of a determination under subsection (3), the person may, if the Board thinks fit, be registered for payment under deduction.

(8)A person whose registration for gross payment is cancelled under this section may not, within the period of one year after the cancellation takes effect (see subsections (2) and (4) and section 67(5)), apply for registration for gross payment.

(9)In this section “a prescribed period” means a period prescribed by regulations made by the Board.

67Registration for gross payment: appealsU.K.

(1)A person aggrieved by—

(a)the refusal of an application for registration for gross payment, or

(b)the cancellation of his registration for gross payment,

may by notice appeal F37....

(2)The notice must be given to the Board of Inland Revenue within 30 days after the refusal or cancellation.

(3)The notice must state the person’s reasons for believing that—

(a)the application should not have been refused, or

(b)his registration for gross payment should not have been cancelled.

(4)The jurisdiction of the [F38tribunal] on such an appeal [F39that is notified to the tribunal] shall include jurisdiction to review any relevant decision taken by the Board of Inland Revenue in the exercise of their functions under section 63, 64, 65 or 66.

(5)Where a person appeals against the cancellation of his registration for gross payment by virtue of a determination under section 66(1), the cancellation of his registration does not take effect until whichever is the latest of the following—

(a)the abandonment of the appeal,

(b)the determination of the appeal by the [F40tribunal], or

(c)the determination of the appeal by the [F41Upper Tribunal or a court].

F42(6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

68Registration for payment under deduction: cancellation and appealsU.K.

The Board of Inland Revenue may make regulations providing for—

(a)the cancellation, in such circumstances as may be prescribed by the regulations, of a person’s registration for payment under deduction;

(b)appeals against a refusal to register a person for payment under deduction or the cancellation of such registration.

Verification, returns [F43, security] etc and penaltiesU.K.

Textual Amendments

69Verification etc of registration status of sub-contractorsU.K.

(1)The Board of Inland Revenue may make regulations requiring persons who make payments under contracts relating to construction operations, except in prescribed circumstances, to verify with the Board whether a person to whom they are proposing to make—

(a)a contract payment, or

(b)a payment which would be a contract payment but for section 60(4),

is registered for gross payment or for payment under deduction.

(2)The provision that may be made by regulations under subsection (1) includes provision—

(a)for preventing a person from verifying unless such conditions as may be prescribed have been satisfied;

(b)as to the period for which the verification remains valid.

(3)The Board of Inland Revenue may make regulations requiring the Board to notify persons of a prescribed description who make payments under contracts relating to construction operations that—

(a)a person registered for gross payment has become registered for payment under deduction or has ceased to be registered under section 63, or

(b)a person registered for payment under deduction has become registered for gross payment or has ceased to be registered under section 63.

(4)The provision that may be made by regulations under subsection (1) or (3) includes provision for a person to be entitled to assume, except in prescribed circumstances, that—

(a)a person verified or notified as being registered for gross payment, or

(b)a person verified or notified as being registered for payment under deduction,

has not subsequently ceased to be so registered.

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

70Periodic returns by contractors etcU.K.

(1)The Board of Inland Revenue may make regulations requiring persons who make payments under construction contracts—

(a)to make to the Board, at such times and in respect of such periods as may be prescribed, returns relating to such payments;

(b)to keep such records as may be prescribed relating to such payments;

(c)to provide such information as may be prescribed, at such times as may be prescribed, to persons to whom such payments are made or to such of those persons as are of a prescribed description.

(2)The provision that may be made by regulations under subsection (1)(a) includes provision requiring, except in such circumstances as may be prescribed,—

(a)the person making a return to declare in the return that none of the contracts to which the return relates is a contract of employment;

(b)the person making a return to declare in the return that, in the case of each person to whom a payment to which the return relates is made, he has complied with the requirements of any regulations made under section 69(1) (verification of registration status);

(c)returns to contain such other information and to be in such form as may be prescribed;

(d)a return to be made where no payments have been made in the period to which the return relates.

(3)The Board of Inland Revenue may make regulations with respect to—

(a)the production, copying and removal of, and the making of extracts from, any records kept by virtue of any such requirement as is referred to in subsection (1)(b), and

(b)rights of access to, or copies of, any such records which are removed.

(4)Regulations under this section may make provision—

(a)for or in connection with enabling a person who makes payments under construction contracts to appoint another person (a “scheme representative”) to act on his behalf in connection with any requirements imposed on him by regulations under this section, and

(b)as to the rights, obligations or liabilities of scheme representatives.

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

[F4470ASecurity for payments to HMRCU.K.

(1)The Commissioners for Her Majesty's Revenue and Customs may by regulations make provision for and in connection with requiring the giving, by prescribed persons and in prescribed circumstances, of security for the payment of amounts that a person is or may be liable to pay to the Commissioners under this Chapter.

(2)Regulations under this section must provide that security may be required only where an officer of Revenue and Customs considers it necessary for the protection of the revenue.

(3)Regulations under this section must provide for a right of appeal against—

(a)decisions to require security to be given;

(b)decisions as to the amount, terms or duration of any security required.

(4)A person commits an offence if—

(a)the person fails to comply with a requirement to give security that is imposed by regulations under this section, and

(b)the failure continues for such period as is prescribed.

(5)A person who commits an offence under subsection (4) is liable on summary conviction—

(a)in England and Wales, to a fine;

(b)in Scotland or Northern Ireland, to a fine not exceeding level 5 on the standard scale.

(6)In this section—

  • prescribed” means prescribed in regulations under this section;

  • security” includes further security.]

Textual Amendments

F44S. 70A inserted (12.2.2019) by Finance Act 2019 (c. 1), s. 82(1)(b)

71Collection and recovery of sums to be deductedU.K.

(1)The Board of Inland Revenue must make regulations with respect to the collection and recovery, whether by assessment or otherwise, of sums required to be deducted from any payments under section 61.

(2)The regulations may include any matters with respect to which PAYE regulations may be made.

(3)Interest required to be paid by the regulations—

(a)is to be paid without any deduction of income tax, F45...

F45(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F45S. 71(3)(b) and preceding word repealed (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 570, Sch. 3 Pt. 1 (with Sch. 2 Pts. 1, 2)

72PenaltiesU.K.

If a person, for the purpose of becoming registered for gross payment or for payment under deduction,—

(a)makes any statement, or furnishes any document, which he knows to be false in a material particular, or

(b)recklessly makes any statement, or furnishes any document, which is false in a material particular,

he shall be liable to a penalty not exceeding £3,000.

SupplementaryU.K.

73Regulations under this Chapter: supplementaryU.K.

(1)The Board of Inland Revenue may by regulations make such other provision for giving effect to this Chapter as they consider necessary or expedient.

(2)The provision that may be made by regulations under subsection (1) includes provision for or in connection with modifying the application of this Chapter in circumstances where—

(a)a person acts as the agent of a contractor or sub-contractor;

(b)a person’s right to payments under a construction contract is assigned or otherwise transferred to another person.

(3)Regulations under this Chapter may make different provision for different cases.

(4)Any power under this Chapter to make regulations authorising or requiring a document (whether or not of a particular description), or any records or information, to be given or requested by or to be sent or produced to the Board of Inland Revenue includes power—

(a)to authorise the Board to nominate a person who is not an officer of the Board to be the person who on behalf of the Board—

(i)gives or requests the document, records or information; or

(ii)is the recipient of the document, records or information; and

(b)to require the document, records or information, in cases prescribed by or determined under the regulations, to be sent or produced to the address (determined in accordance with the regulations) of the person nominated by the Board to receive it on their behalf.

[F4673ADesignated international organisations: exemption from section 59U.K.

(1)The Treasury may by order designate for the purposes of this section any international organisation of which the United Kingdom is a member.

(2)Section 59 does not apply to an organisation which is so designated.]

Textual Amendments

F46S. 73A inserted (with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 461 (with Sch. 2)

74Meaning of “construction operations”U.K.

(1)In this Chapter “construction operations” means operations of a description specified in subsection (2), not being operations of a description specified in subsection (3); and references to construction operations—

(a)except where the context otherwise requires, include references to the work of individuals participating in the carrying out of such operations; and

(b)do not include references to operations carried out or to be carried out otherwise than in the United Kingdom (or the territorial sea of the United Kingdom).

(2)The following operations are, subject to subsection (3), construction operations for the purposes of this Chapter—

(a)construction, alteration, repair, extension, demolition or dismantling of buildings or structures (whether permanent or not), including offshore installations;

(b)construction, alteration, repair, extension or demolition of any works forming, or to form, part of the land, including (in particular) walls, roadworks, power-lines, electronic communications apparatus, aircraft runways, docks and harbours, railways, inland waterways, pipe-lines, reservoirs, water-mains, wells, sewers, industrial plant and installations for purposes of land drainage, coast protection or defence;

(c)installation in any building or structure of systems of heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection;

(d)internal cleaning of buildings and structures, so far as carried out in the course of their construction, alteration, repair, extension or restoration;

(e)painting or decorating the internal or external surfaces of any building or structure;

(f)operations which form an integral part of, or are preparatory to, or are for rendering complete, such operations as are previously described in this subsection, including site clearance, earth-moving, excavation, tunnelling and boring, laying of foundations, erection of scaffolding, site restoration, landscaping and the provision of roadways and other access works.

(3)The following operations are not construction operations for the purposes of this Chapter—

(a)drilling for, or extraction of, oil or natural gas;

(b)extraction (whether by underground or surface working) of minerals and tunnelling or boring, or construction of underground works, for this purpose;

(c)manufacture of building or engineering components or equipment, materials, plant or machinery, or delivery of any of these things to site;

(d)manufacture of components for systems of heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection, or delivery of any of these things to site;

(e)the professional work of architects or surveyors, or of consultants in building, engineering, interior or exterior decoration or in the laying-out of landscape;

(f)the making, installation and repair of artistic works, being sculptures, murals and other works which are wholly artistic in nature;

(g)signwriting and erecting, installing and repairing signboards and advertisements;

(h)the installation of seating, blinds and shutters;

(i)the installation of security systems, including burglar alarms, closed circuit television and public address systems.

(4)The Treasury may by order made by statutory instrument amend either or both of subsections (2) and (3) by—

(a)adding,

(b)varying, or

(c)removing,

any description of operations.

(5)No statutory instrument containing an order under subsection (4) shall be made unless a draft of the instrument has been laid before and approved by a resolution of the House of Commons.

75Meaning of “the Inland Revenue” etc and delegation of Board’s functionsU.K.

(1)In this Chapter “the Inland Revenue” means any officer of the Board of Inland Revenue.

(2)In this Chapter “the Board of Inland Revenue” means the Commissioners of Inland Revenue (as to which, see in particular the Inland Revenue Regulation Act 1890 (c. 21)).

(3)The Board of Inland Revenue may make regulations providing for any of the following to be done on behalf of the Board—

(a)the registration of persons under section 63;

(b)the giving of directions under section 64(5); and

(c)the cancellation under section 66 of a person’s registration for gross payment.

76Consequential amendmentsU.K.

Schedule 12 to this Act (which makes consequential amendments) has effect.

77Commencement and transitional provisionU.K.

(1)This Chapter has effect in relation to payments made on or after the appointed day under contracts relating to construction operations.

(2)Where a certificate issued to a person under section 561 of the Taxes Act 1988 is in force immediately before the appointed day, the person is to be treated as if, on the appointed day, the Board of Inland Revenue had registered him for gross payment.

(3)Where a registration card issued to a person in accordance with regulations made under section 566(2A) of the Taxes Act 1988 is in force immediately before the appointed day, the person is to be treated as if, on the appointed day, the Board of Inland Revenue had registered him for payment under deduction.

(4)Subsection (5) applies in relation to the first payment (“the relevant payment”) made after the appointed day by a person (“C”) to a sub-contractor (“SC”) under a contract relating to construction operations if—

(a)before the appointed day, C had made one or more payments to SC under the contract or another such contract,

(b)the last of those payments (“the last payment”) was made in the year of assessment in which the relevant payment was made or in either of the two years of assessment before that,

(c)at the time of the last payment—

(i)a certificate issued to SC under section 561 of the Taxes Act 1988 was in force, or

(ii)a registration card issued to SC in accordance with regulations made under section 566(2A) of that Act was in force, and

(d)on making the relevant payment, C has no reason to believe that SC—

(i)did not become registered for gross payment or (as the case may be) for payment under deduction by virtue of subsection (2) or (3), and

(ii)is not still so registered.

(5)Where this subsection applies, regulations under section 69(1) shall not require C, before making the relevant payment, to verify whether SC is registered for gross payment or for payment under deduction.

(6)Where subsection (5) applies, C shall be entitled to assume, on making any further payments to SC under a contract relating to construction operations, that SC has not subsequently ceased to be so registered, unless notified to the contrary in accordance with regulations made under section 69(3).

(7)In this section “the appointed day” means such day as the Treasury may by order appoint.

(8)The Treasury may by order make such further supplemental and transitional provision and savings as they think fit in connection with the coming into effect of this Chapter.

Chapter 4U.K.Personal taxation

Taxable benefitsU.K.

78Childcare and childcare vouchersU.K.

(1)Schedule 13 to this Act contains amendments of the Income Tax (Earnings and Pensions) Act 2003 (c. 1) relating to childcare and childcare vouchers.

(2)The amendments have effect for the year 2005-06 and subsequent years of assessment.

F4779Exemption for loaned computer equipmentU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F47S. 79 repealed (with effect in accordance with Sch. 26 Pt. 3(7) Note of the amending Act) by Finance Act 2006 (c. 25), Sch. 26 Pt. 3(7)

80VansU.K.

(1)Schedule 14 to this Act contains amendments of the Income Tax (Earnings and Pensions) Act 2003 relating to vans.

(2)The amendments have effect for the year 2005-06 and subsequent years of assessment.

81Emergency vehiclesU.K.

(1)In the Income Tax (Earnings and Pensions) Act 2003, after section 248 insert—

248AEmergency vehicles

(1)This section applies where—

(a)an emergency vehicle is made available to a person employed in an emergency service for the person’s private use,

(b)the terms on which it is made available prohibit its private use otherwise than when the person is on call or engaged in on-call commuting, and

(c)the person does not make private use of it otherwise than in such circumstances.

(2)No liability to income tax arises by virtue of Chapter 6 or 10 of Part 3 (taxable benefits: cars, vans etc. and residual liability to charge) in respect of the benefit.

(3)Emergency vehicle” means a vehicle which is used to respond to emergencies and which either—

(a)has fixed to it a lamp designed to emit a flashing light for use in emergencies, or

(b)would have such a lamp fixed to it but for the fact that (if it did) a special threat to the personal physical security of those using it would arise by reason of it being apparent that they were employed in an emergency service.

(4)The following are “employed in an emergency service”—

(a)constables and other persons employed for police purposes,

(b)persons employed for the purposes of a fire, or fire and rescue, service, and

(c)persons employed in the provision of ambulance or paramedic services.

(5)The Treasury may by order amend subsection (4).

(6)Private use”, in relation to a person, means any use other than for the person’s business travel; and “business travel” has the same meaning as in Chapter 6 of Part 3 (see section 171(1)).

(7)A person to whom an emergency vehicle is made available is on call when liable, as part of normal duties, to be called on to use the emergency vehicle to respond to emergencies.

(8)A person to whom an emergency vehicle is made available is engaged in on-call commuting when the person—

(a)is using it for ordinary commuting or for travel between two places that is for practical purposes substantially ordinary commuting, and

(b)is required to do so in order that it is available for use by the person, as part of normal duties, for responding to emergencies..

(2)In section 236(2)(c) of that Act (mileage allowance and passenger payments: meaning of “company vehicle”), after “vans)” insert “ and section 248A (emergency vehicles) ”.

(3)This section has effect for the year 2004-05 and subsequent years of assessment.

82European travel expenses of MPs and other representativesU.K.

(1)The Income Tax (Earnings and Pensions) Act 2003 (c. 1) is amended as follows.

(2)In section 294 (EU travel expenses of MPs and other representatives) in subsection (1) (exemption from income tax in respect of sums paid to Members of the House of Commons and other representatives in respect of EU travel expenses) for “EU” (in both places) substitute “ European ”.

(3)In that section, for subsections (2) to (4) substitute—

(2)European travel expenses” means the cost of, and any additional expenses incurred in, travelling between the United Kingdom and a relevant European location.

(3)Relevant European location” means—

(a)a European Union institution or agency, or

(b)the national parliament of—

(i)another member State,

(ii)a candidate or applicant country, or

(iii)a member State of the European Free Trade Association.

(4)The Treasury may by order amend subsection (3) by—

(a)adding a European location,

(b)removing a European location, or

(c)varying the description of a European location..

(4)In the heading of that section, “EU” accordingly becomes “European”.

(5)This section has effect in relation to sums paid in respect of costs or expenses incurred on or after 6th April 2004.

Gift aidU.K.

F4883Giving through the self-assessment returnU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F48S. 83 repealed (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 427, Sch. 3 Pt. 1 (with Sch. 2)

Gifts with a reservationU.K.

84Charge to income tax by reference to enjoyment of property previously ownedU.K.

(1)Schedule 15 (which contains provisions imposing a charge to income tax by reference to benefits received in certain circumstances by a former owner of property) has effect.

(2)That Schedule has effect for the year 2005-06 and subsequent years of assessment.

Employment-related securities and optionsU.K.

85Relief where national insurance contributions met by employeeU.K.

(1)Schedule 16 to this Act provides—

(a)for income tax relief in certain cases where national insurance contributions are met by an employee, and

(b)for consequential amendments.

(2)This section (and that Schedule) come into force in accordance with provision made by the Treasury by order made by statutory instrument.

Commencement Information

I12S. 85 in force at 1.9.2004 by S.I. 2004/1945, art. 2

86Shares in employee-controlled companies and unconnected companiesU.K.

(1)Each of the provisions of Part 7 of the Income Tax (Earnings and Pensions) Act 2003 (c. 1) (employment income: securities) specified in subsection (2) (exception from charges for certain company shares) is amended in accordance with subsections (3) to (5).

(2)The provisions are—

(a)section 429 (restricted securities),

(b)section 443 (convertible securities),

(c)section 446R (securities acquired for less than market value), and

(d)section 449 (post-acquisition benefits from securities).

(3)In subsection (1) of each of those sections, after paragraph (b) (but before the word “and” where that word features at the end) insert—

(ba)subsection (1A) is satisfied,.

F49(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5)In subsection (4) of sections 429, 443 and 446R, and in subsection (3) of section 449, for the words after “are not” substitute “ employment-related securities. ”; and accordingly omit sections 429(5), 443(5), 446R(5) and 449(4).

(6)In Chapter 3A of that Part of that Act (securities with artificially depressed market value), after section 446I insert—

446IADisapplication of exceptions from charges

(1)Section 429 (exception from charge under section 426 for certain company shares) does not prevent section 426 (restricted securities: chargeable events) applying in relation to an event if section 446E or 446I(1)(a) would have effect in relation to the event.

(2)Section 443 (exception from charge under section 438 for certain company shares) does not prevent section 438 (convertible securities: chargeable events) applying in relation to an event if section 446G, 446H or 446I(1)(b) would have effect in relation to the event.

(3)Section 446R (exception from charge under Chapter 3C for certain company shares) does not prevent that Chapter (securities acquired for less than market value) applying in relation to employment-related securities if section 446B would have effect in relation to them.

(4)Section 449 (exception from charge under Chapter 4 for certain company shares) does not prevent that Chapter (benefits from securities) applying in relation to a benefit if section 446I(1)(e) would have effect in relation to the benefit..

(7)In Chapter 3B of that Part of that Act (securities with artificially enhanced market value), after section 446N insert—

446NADisapplication of exceptions from charges

(1)None of the provisions specified in subsection (2) (exceptions from charges for certain company shares) apply in relation to employment-related securities if the market value of the employment-related securities at the time of the acquisition has been increased by at least 10% by non-commercial increases within the period of 7 years ending with the acquisition.

(2)The provisions are—

(a)section 429 (restricted securities),

(b)section 443 (convertible securities),

(c)section 446R (securities acquired for less than market value), and

(d)section 449 (post-acquisition benefits from securities).

(3)If section 446L (market value on valuation date increased by more than 10% by non-commercial increases during relevant period) applies in relation to employment-related securities, section 429 does not subsequently apply in relation to the employment-related securities..

(8)This section applies on and after 7th May 2004.

Textual Amendments

F49S. 86(4) repealed (with effect in accordance with Sch. 11 Pt. 2(1) Note of the amending Act) by Finance (No. 2) Act 2005 (c. 22), Sch. 11 Pt. 2(1)

87Restricted securities with artificially depressed valueU.K.

(1)Section 446E of the Income Tax (Earnings and Pensions) Act 2003 (c. 1) (employee securities with artificially depressed market value: charge on restricted securities) is amended as follows.

(2)In subsection (1), after “on restricted securities),” insert—

(aa)immediately before the employment-related securities are disposed of (in circumstances which do not constitute such an event) or are cancelled without being disposed of,.

(3)For subsections (3) to (6) substitute—

(3)The relevant period”is the period beginning—

(a)if section 425(2) (no charge on acquisition of certain restricted securities or restricted interests in securities) applied in relation to the employment-related securities, 7 years before the acquisition, and

(b)in any other case, 7 years before the relevant date,

and ending with the relevant date.

(4)The relevant date”is—

(a)in a case within subsection (1)(a), the date on which the chargeable event concerned occurs,

(b)in a case within subsection (1)(aa), the date on which the disposal or cancellation concerned occurs, and

(c)in a case within subsection (1)(b), the 5th April concerned.

(5)Where this section applies in a case within subsection (1)(aa) or (b), a chargeable event within section 427(3)(a) (lifting of restrictions) is to be treated as occurring in relation to the employment-related securities on the relevant date.

(6)In every case where this section applies, subsection (1) of section 428 (amount of charge on restricted securities) applies as if the reference in subsection (2) of that section to what would be the market value of the employment-related securities immediately after the chargeable event but for any restrictions were to what would be their market value at the appropriate time but for the matters to be disregarded.

(7)The appropriate time”is—

(a)in a case within subsection (1)(a) or (b), the time immediately after the chargeable event concerned, and

(b)in a case within subsection (1)(aa), the time immediately before the chargeable event concerned.

(8)“The matters to be disregarded” are—

(a)any restrictions,

(b)the things done as mentioned in subsection (2), and

(c)if the employment-related securities are about to be disposed of or cancelled, that fact.

(9)Where this section applies in a case within subsection (1)(aa), section 428(1) applies with the omission of the reference to OP.

(10)Where this section applies in a case within subsection (1)(a) and the chargeable event concerned is within section 427(3)(c) (disposal for consideration), section 428 applies with the omission of subsection (9) (case where consideration is less than actual market value)..

(4)This section applies on and after 7th May 2004.

(5)But if the employment-related securities were acquired before that date, section 446E of the Income Tax (Earnings and Pensions) Act 2003 (c. 1) does not apply by virtue of the amendment made by subsection (2) of this section unless their market value would be artificially low immediately before the disposal or cancellation if the date on which the relevant period began were the later of—

(a)that on which it did begin, and

(b)7th May 2004.

88Shares under approved plans and schemesU.K.

(1)The Income Tax (Earnings and Pensions) Act 2003 is amended as follows.

(2)Omit section 421G (exclusion from Chapters 2 to 4 of Part 7 of shares awarded or acquired under approved plan or scheme).

(3)In Chapter 2 of Part 7 (restricted securities), after section 431 insert—

431AShares under approved plan or scheme

(1)Where employment-related securities are restricted securities or a restricted interest in securities, the employer and the employee are to be treated as making an election under section 431(1) in relation to the employment-related securities if they are shares, or an interest in shares, to which this subsection applies.

(2)Subsection (1) applies to—

(a)shares awarded or acquired under an approved share incentive plan (within the meaning of Chapter 6 of this Part) in circumstances in which (in accordance with section 490) no liability to income tax arises,

(b)shares acquired by the exercise of a share option granted under an approved SAYE option scheme (within the meaning of Chapter 7 of this Part) in circumstances in which (in accordance with section 519) no liability to income tax arises,

(c)shares acquired by the exercise of a share option granted under an approved CSOP scheme (within the meaning of Chapter 8 of this Part) in circumstances in which (in accordance with section 524) no liability to income tax arises, and

(d)shares acquired by the exercise of a qualifying option within the meaning of section 527(4) (enterprise management incentives) in circumstances in which (in accordance with section 530) no liability to income tax arises..

(4)In section 489 (operation of tax advantages in connection with approved share incentive plans), after subsection (3) insert—

(4)And those sections do not apply if the main purpose (or one of the main purposes) of the arrangements under which the shares in question are awarded or acquired is the avoidance of tax or national insurance contributions..

(5)In sections 505 and 506 (charge on shares ceasing to be subject to approved share incentive plan), after subsection (4) insert—

(4A)Any tax due under subsection (2) or (3) is reduced by the amount or aggregate amount of any tax paid by virtue of Chapter 3B of this Part in relation to the shares..

(6)In section 519(1) (approved SAYE option schemes: no charge in respect of exercise of option) insert at the end and

(c)the avoidance of tax or national insurance contributions is not the main purpose (or one of the main purposes) of any arrangements under which the option was granted or is exercised..

(7)In section 524(1) (approved CSOP schemes: no charge in respect of exercise of option) insert at the end and

(c)the avoidance of tax or national insurance contributions is not the main purpose (or one of the main purposes) of any arrangements under which the option was granted or is exercised..

(8)Section 701 (PAYE: meaning of “asset”) is amended as follows.

(9)In subsection (2)(c)—

(a)in sub-paragraph (ia), for the words after “employee” substitute “ under a scheme approved under Schedule 4 (approved CSOP schemes) in circumstances in which Condition A or B as set out in section 524(2) or (2A) is met; ”,

(b)omit sub-paragraph (ii), and

(c)in sub-paragraph (iii), after “1996” insert “ where the avoidance of tax or national insurance contributions is not the main purpose (or one of the main purposes) of any arrangements under which the right was obtained or is exercised ”.

(10)After subsection (3) insert—

(3A)Paragraph (c) of subsection (2) does not apply to shares after their acquisition as mentioned in that paragraph..

(11)This section has effect on and after 18th June 2004 and (so far as it does not relate to the award or acquisition of shares) applies in relation to shares awarded or acquired before that date as well as in relation to those awarded or acquired on or after that date.

(12)Where section 431A(1) of the Income Tax (Earnings and Pensions) Act 2003 (c. 1) (as inserted by subsection (3)) has effect (by virtue of subsection (11)) in relation to shares acquired before 18th June 2004, it applies in relation to them so as to treat an election under section 431(1) of that Act as made in relation to them on that date.

(13)For the purposes of the application of Chapter 3B of Part 7 of that Act (securities with artificially enhanced market value) by reason of subsections (2) and (11) in relation to shares acquired before 18th June 2004, section 446O of that Act (meaning of “relevant period”) has effect as if they were acquired on that date.

89Shares acquired on public offerU.K.

(1)Section 421F of the Income Tax (Earnings and Pensions) Act 2003 (c. 1) (exclusion from Chapters 2 to 4 of Part 7 of shares acquired under terms of offer to the public) is amended as follows.

(2)In subsection (1), for “Chapters 2 to 4” substitute “ Chapters 2, 3 and 3C ”.

(3)After that subsection insert—

(1A)But subsection (1) does not disapply those Chapters if the main purpose (or one of the main purposes)—

(a)of the arrangements under which the right or opportunity under which the shares were acquired, or

(b)for which the shares are held,

is the avoidance of tax or national insurance contributions..

(4)This section has effect on and after 18th June 2004 and applies in relation to shares acquired before that date as well as in relation to those acquired on or after that date.

(5)For the purposes of the application of Chapter 3B of Part 7 of the Income Tax (Earnings and Pensions) Act 2003 (securities with artificially enhanced market value) by reason of subsections (2) and (4) in relation to shares acquired before that date, section 446O of that Act (meaning of “relevant period”) has effect as if they were acquired on that date.

90Associated persons etc.U.K.

(1)Part 7 of the Income Tax (Earnings and Pensions) Act 2003 (employment income: securities) is amended as follows.

(2)In section 421C(2) (meaning of “relevant linked person” for purposes of Chapters 1 to 4), for “are connected or, although not connected, are” substitute “ are or have been connected or (without being or having been connected) are or have been ”.

(3)In section 472(2) (meaning of “relevant linked person” for purposes of Chapter 5), for “are connected or, although not connected, are” substitute “ are or have been connected or (without being or having been connected) are or have been ”.

(4)In section 477(3)(c) (chargeable events in relation to employment-related securities options), for the words after “benefit” substitute “ in connection with the employment-related securities option (other than one within paragraph (a) or (b)). ”

(5)This section has effect on and after 18th June 2004 and applies in relation to securities, interests and options that were employment-related securities or employment-related securities options on that date (as well as those acquired on or after that date).

MiscellaneousU.K.

F5091Income of spouses: jointly held propertyU.K.

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Textual Amendments

F50S. 91 repealed (with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 3 Pt. 1 (with Sch. 2)

92Minor amendments of or connected with ITEPA 2003U.K.

Schedule 17 to this Act contains minor amendments of or connected with the Income Tax (Earnings and Pensions) Act 2003 (c. 1).

Chapter 5U.K.Enterprise incentives

93Enterprise investment schemeU.K.

Schedule 18 (which makes amendments to the enterprise investment scheme) has effect.

94Venture capital trustsU.K.

F51(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F51(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3)Schedule 19 (which makes amendments relating to venture capital trusts) has effect.

Textual Amendments

F51S. 94(1)(2) repealed (with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 3 Pt. 1 (with Sch. 2)

95Corporate venturing schemeU.K.

Schedule 20 (which makes amendments relating to the corporate venturing scheme) has effect.

96Enterprise management incentives: subsidiariesU.K.

(1)Schedule 5 to the Income Tax (Earnings and Pensions) Act 2003 (enterprise management incentives) is amended as follows.

(2)In paragraph 8 (qualifying companies: introduction) after “having only qualifying subsidiaries (see paragraphs 10 and 11),” insert— “ property managing subsidiaries (see paragraphs 11A and 11B), ”.

(3)In paragraph 10 (the qualifying subsidiaries requirement) for sub-paragraph (2) substitute—

(2)In this paragraph “subsidiary” means any company which the company controls, either on its own or together with any person connected with it.

(3)For the purpose of sub-paragraph (2), the question whether a person controls a company is to be determined in accordance with section 416(2) to (6) of ICTA (“control” in the context of close companies).

(4)In paragraph 11 (meaning of “qualifying subsidiary”)—

(a)in sub-paragraph (2), omit paragraphs (a) to (c),

(b)before paragraph (d) of that sub-paragraph insert—

(ca)that the subsidiary is a 51% subsidiary of the holding company;,

(c)in paragraph (d) of that sub-paragraph, after “company” insert “ or another of its subsidiaries ”,

(d)in paragraph (e) of that sub-paragraph, for “the conditions in paragraphs (a) to” substitute “ either of the conditions in paragraphs (ca) and ”,

(e)omit sub-paragraph (3),

(f)after sub-paragraph (7) insert—

(8)Sub-paragraph (9) applies at a time when the subsidiary or another company is in administration or receivership.

(9)The subsidiary is not to be regarded, by reason only of anything done as a consequence of the company concerned being in administration or receivership, as having ceased to be a company in relation to which the conditions in sub-paragraph (2) are met if—

(a)the entry into administration or receivership, and

(b)everything done as a consequence of the company concerned being in administration or receivership,

is for commercial reasons and is not part of a scheme or arrangement the main purpose (or one of the main purposes) of which is the avoidance of tax.

(10)Section 312(2A) of ICTA (meaning of being in administration or receivership) applies for the purposes of sub-paragraphs (8) and (9) as it applies for the purposes of Chapter 3 of Part 7 of ICTA (enterprise investment scheme)..

(5)After paragraph 11 insert—

11AThe property managing subsidiaries requirement

(1)A company is not a qualifying company if it has a property managing subsidiary which is not a qualifying 90% subsidiary of the company (see paragraph 11B).

(2)Property managing subsidiary” means a qualifying subsidiary of a company whose business consists wholly or mainly in the holding or managing of land or any property deriving its value from land.

(3)In sub-paragraph (2) “land” and “property deriving its value from land” have the same meaning as in section 776 of ICTA.

11BMeaning of “qualifying 90% subsidiary”

(1)A company (“the subsidiary”) is a qualifying 90% subsidiary of a company (“the holding company”) if the following conditions are met.

(2)The conditions are—

(a)that the holding company possesses not less than 90% of the issued share capital of, and not less than 90% of the voting power in, the subsidiary;

(b)that the holding company would—

(i)in the event of a winding up of the subsidiary, or

(ii)in any other circumstances,

be beneficially entitled to not less than 90% of the assets of the subsidiary which would then be available for distribution to the shareholders of the subsidiary;

(c)that the holding company is beneficially entitled to not less than 90% of any profits of the subsidiary which are available for distribution to the shareholders of the subsidiary;

(d)that no person other than the holding company has control of the subsidiary; and

(e)that no arrangements are in existence by virtue of which any of the conditions in paragraphs (a) to (d) would cease to be met.

(3)Sub-paragraphs (4) to (10) of paragraph 11 (but not sub-paragraph (6)(b)) apply in relation to the conditions in sub-paragraph (2) above as they apply in relation to the conditions in sub-paragraph (2) of that paragraph..

(6)The amendments made by this section have effect in relation to any right to acquire shares granted on or after 17th March 2004.

Chapter 6U.K.Exemption from income tax for certain interest and royalty payments

IntroductoryU.K.

F5297IntroductoryU.K.

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Exemption from income taxU.K.

F5398Exemption from income tax for certain interest and royalty paymentsU.K.

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F5499Permanent establishments and “25% associates”U.K.

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Exemption noticesU.K.

F55100Interest payments: exemption noticesU.K.

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Textual Amendments

Payment without deductionU.K.

F56101Payment of royalties without deduction at sourceU.K.

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Textual Amendments

F56S. 101 repealed (with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 463, Sch. 3 Pt. 1 (with Sch. 2)

F57102Claim for tax deducted at source from exempt interest or royalty paymentsU.K.

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Textual Amendments

F57S. 102 repealed (with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 463, Sch. 3 Pt. 1 (with Sch. 2)

Special relationships and anti-avoidanceU.K.

F58103Special relationshipsU.K.

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Textual Amendments

F59104Anti-avoidanceU.K.

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Textual Amendments

SupplementaryU.K.

105Consequential amendmentsU.K.

(1)Section 98 of the Taxes Management Act 1970 (c. 9) (special returns etc) is amended as follows.

(2)In subsection (4A)(b), after “(4D)” insert “ , (4DA) ”.

(3)After subsection (4D) insert—

(4DA)A payment is within this subsection if—

(a)it is a payment to which section 349(1) of the principal Act (requirement to deduct tax) applies,

(b)a company, purporting to rely on section 101 of the Finance Act 2004 (payment of royalties without deduction at source), makes the payment without deduction of tax under section 349(1) of the principal Act, and

(c)at the time the payment is made section 98 of the Finance Act 2004 does not apply to the payment and the company—

(i)does not believe that that section does so apply, or

(ii)if it does so believe, cannot reasonably do so..

(4)In section 18 of the Taxes Act 1988 (Schedule D) after subsection (5) insert—

(6)This section is subject to Chapter 6 of Part 3 of the Finance Act 2004 (exemption from income tax for certain interest and royalty payments)..

(5)In section 349 of the Taxes Act 1988 (certain payments to be made subject to deduction of income tax) after subsection (6) insert—

(7)This section is subject to Chapter 6 of Part 3 of the Finance Act 2004 (exemption from income tax for certain interest and royalty payments)..

F60106Transitional provisionU.K.

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Textual Amendments

Chapter 7U.K.Savings income: double taxation arising from withholding tax

IntroductoryU.K.

F61107IntroductoryU.K.

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Textual Amendments

F61Ss. 107-111 repealed (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 8 para. 62(a), Sch. 10 Pt. 1 (with Sch. 9 paras. 1-9, 22)

Credit etc for special withholding taxU.K.

F61108Income tax credit etc for special withholding taxU.K.

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Textual Amendments

F61Ss. 107-111 repealed (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 8 para. 62(a), Sch. 10 Pt. 1 (with Sch. 9 paras. 1-9, 22)

F61109Capital gains tax credit etc for special withholding taxU.K.

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Textual Amendments

F61Ss. 107-111 repealed (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 8 para. 62(a), Sch. 10 Pt. 1 (with Sch. 9 paras. 1-9, 22)

F61110Credit under Part 18 of Taxes Act 1988 to be allowed firstU.K.

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Textual Amendments

F61Ss. 107-111 repealed (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 8 para. 62(a), Sch. 10 Pt. 1 (with Sch. 9 paras. 1-9, 22)

Computation of income etcU.K.

F61111Computation of income etc subject to special withholding tax onlyU.K.

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Textual Amendments

F61Ss. 107-111 repealed (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 8 para. 62(a), Sch. 10 Pt. 1 (with Sch. 9 paras. 1-9, 22)

112Computation of income etc subject to foreign tax and special withholding taxU.K.

(1)Section 795 of the Taxes Act 1988 (double taxation relief: computation of income subject to foreign tax) is amended as follows.

(2)In subsection (1) (remittance basis: grossing up) after “increased by” insert “ — (a) ” and at the end insert— , and

(b)the amount of any special withholding tax levied in respect of the income..

(3)In subsection (2)(a) (other cases: no deduction for foreign tax) after “foreign tax” insert “ or special withholding tax ”.

(4)After subsection (4) insert—

(5)In this section—

(a)special withholding tax” has the same meaning as in Chapter 7 of Part 3 of the Finance Act 2004 (see section 107(3) of that Act); and

(b)references to special withholding tax are to special withholding tax in respect of which a claim has been made under that Chapter..

(5)Section 277 of the Taxation of Chargeable Gains Act 1992 (c. 12) (which applies Chapters 1 and 2 of Part 18 of the Taxes Act 1988 in relation to capital gains tax) is amended as follows.

(6)After subsection (1) insert—

(1A)Subsection (1B) below applies where—

(a)a chargeable gain accrues to a person on a disposal by him of assets in circumstances where the consideration for the disposal consists of or includes an amount of savings income, and

(b)special withholding tax is levied in respect of the whole or any part of the consideration for the disposal.

(1B)In section 795 of the Taxes Act, as applied by this section, for the reference in subsection (1)(b) to the amount of any special withholding tax levied in respect of the income, there shall be substituted a reference to an amount equal to—

where—

SWT is the amount of special withholding tax levied in respect of the whole or the part of the consideration for the disposal,

GUK is the amount of the chargeable gain received in the United Kingdom, and

G is the amount of the chargeable gain accruing to the person on the disposal.

(1C)In subsections (1A) and (1B) above “savings income” and “special withholding tax” have the same meaning as in Chapter 7 of Part 3 of the Finance Act 2004 (see section 107 of that Act); and references to special withholding tax are to special withholding tax in respect of which a claim has been made under that Chapter..

Certificates to avoid levy of special withholding taxU.K.

F62113Issue of certificateU.K.

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Textual Amendments

F62S. 113 repealed (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 8 para. 62(b), Sch. 10 Pt. 1 (with Sch. 9 paras. 1-9, 22)

F63114Refusal to issue certificate and appeal against refusalU.K.

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Textual Amendments

F63S. 114 repealed (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 8 para. 62(b), Sch. 10 Pt. 1 (with Sch. 9 paras. 1-9, 22)

SupplementaryMU.K.

115SupplementaryU.K.

(1)In section 792 of the Taxes Act 1988 (double taxation relief: interpretation of the credit code) in subsection (1), in the definition of “foreign tax”, at the end insert “ (other than special withholding tax within the meaning of Chapter 7 of Part 3 of the Finance Act 2004) ”.

(2)In section 811 of the Taxes Act 1988 (deduction for foreign tax where no credit allowable) in subsection (2), at the end insert “ and to section 111 of the Finance Act 2004 (computation of income subject to special withholding tax) ”.

(3)In section 278 of the Taxation of Chargeable Gains Act 1992 (c. 12) (allowance for foreign tax) in subsection (1), after “section 277” insert “ and to section 111 of the Finance Act 2004 (computation of chargeable gains subject to special withholding tax) ”.

F64(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F64S. 115(4) repealed (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 8 para. 62(c), Sch. 10 Pt. 1 (with Sch. 9 paras. 1-9, 22)

Chapter 8U.K.Chargeable gains

116Restriction of gifts relief etcU.K.

Schedule 21 (which makes provision for relief under section 165 or 260 of the Taxation of Chargeable Gains Act 1992 (c. 12) not to be available on certain transfers to settlor-interested settlements etc or on transfers of shares etc to companies, and makes minor amendments in sections 79 and 281 of that Act) has effect.

117Private residence reliefU.K.

Schedule 22 (which makes provision about private residence relief) has effect.

118Authorised unit trusts: treatment of umbrella schemesU.K.

(1)The Taxation of Chargeable Gains Act 1992 is amended as follows.

(2)In section 99(2) (application of Act to unit trust schemes: definitions)—

(a)in the opening words, after “Subject to subsection (3)” insert “ and section 99A ”; and

(b)for paragraph (b) substitute—

(aa)unit holder” means a person entitled to a share of the investments subject to the trusts of a unit trust scheme;

(b)authorised unit trust” means, as respects an accounting period, a unit trust scheme in the case of which an order under section 243 of the Financial Services and Markets Act 2000 is in force during the whole or part of that period.

(3)After that section insert—

99AAuthorised unit trusts: treatment of umbrella schemes

(1)In this section an “umbrella scheme” means an authorised unit trust—

(a)which provides arrangements for separate pooling of the contributions of the participants and the profits or income out of which payments are to be made to them, and

(b)under which the participants are entitled to exchange rights in one pool for rights in another,

and any reference to a part of an umbrella scheme is a reference to such of the arrangements as relate to a separate pool.

(2)For the purposes of this Act (except subsection (1))—

(a)each of the parts of an umbrella scheme shall be regarded as an authorised unit trust, and

(b)the scheme as a whole shall not be regarded as an authorised unit trust or as any other form of collective investment scheme.

(3)In this Act, in relation to a part of an umbrella scheme, any reference to a unit holder is to a person for the time being having rights in the separate pool to which the part of the umbrella scheme relates.

(4)Nothing in subsections (2) or (3) shall prevent—

(a)gains accruing to an umbrella scheme being regarded as gains accruing to an authorised unit trust for the purposes of section 100(1) (exemption for authorised unit trusts etc);

(b)a transfer of business to an umbrella scheme being regarded as a transfer to an authorised unit trust for the purposes of section 139(4) (exclusion of transfers to authorised unit trusts etc);

(c)a disposal by a unit holder of units in an umbrella scheme being regarded as a disposal by him of units in an authorised unit trust for the purposes of section 271(1)(j) (exemption for disposal of units in an authorised unit trust which is also an approved personal pension scheme etc)..

(4)In section 288 (interpretation)—

(a)in subsection (1), in the definition of “collective investment scheme”, at the end insert “ (subject to section 99A) ”;

(b)in the table in subsection (8) (index of general definitions)—

(i)in the first column after “Unit trust scheme” insert “ and “unit holder” ”;

(ii)in the second column for “s 99” substitute “ ss 99 and 99A ”.

(5)The amendments made by this section have effect in relation to years of assessment and accounting periods beginning on or after 1st April 2004.

Chapter 9U.K.Avoidance involving loss relief or partnership

Individuals benefited by film reliefU.K.

F65119Individuals benefited by film reliefU.K.

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Textual Amendments

F65Ss. 119-123 repealed (with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 464, Sch. 3 Pt. 1 (with Sch. 2)

F65120“Disposal of a right of the individual to profits arising from the trade”U.K.

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Textual Amendments

F65Ss. 119-123 repealed (with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 464, Sch. 3 Pt. 1 (with Sch. 2)

F65121“The losses claimed” and “the individual’s capital contribution to the trade”U.K.

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Textual Amendments

F65Ss. 119-123 repealed (with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 464, Sch. 3 Pt. 1 (with Sch. 2)

F65122Computing the chargeable amountU.K.

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Textual Amendments

F65Ss. 119-123 repealed (with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 464, Sch. 3 Pt. 1 (with Sch. 2)

F65122APartners: meaning of “capital contribution to the trade”U.K.

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Textual Amendments

F65Ss. 119-123 repealed (with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 464, Sch. 3 Pt. 1 (with Sch. 2)

F65123“Film-related losses” and “non-taxable consideration”U.K.

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Textual Amendments

F65Ss. 119-123 repealed (with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 464, Sch. 3 Pt. 1 (with Sch. 2)

Individuals in partnership: restriction of reliefU.K.

F66124Restriction of relief: non-active partnersU.K.

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Textual Amendments

F66S. 124 repealed (with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 3 Pt. 1 (with Sch. 2)

F67125Partnerships exploiting filmsU.K.

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Textual Amendments

F67S. 125 repealed (with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 3 Pt. 1 (with Sch. 2)

Individuals in partnership: exit chargeU.K.

F68126Losses derived from exploiting licence: introductoryU.K.

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Textual Amendments

F68Ss. 126-130 repealed (with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 465, Sch. 3 Pt. 1 (with Sch. 2)

F68127Charge to income taxU.K.

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Textual Amendments

F68Ss. 126-130 repealed (with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 465, Sch. 3 Pt. 1 (with Sch. 2)

F68128Definitions for purposes of section 127U.K.

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Textual Amendments

F68Ss. 126-130 repealed (with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 465, Sch. 3 Pt. 1 (with Sch. 2)

F68129Disposals to which section 126 appliesU.K.

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Textual Amendments

F68Ss. 126-130 repealed (with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 465, Sch. 3 Pt. 1 (with Sch. 2)

F68130“A significant amount of time”U.K.

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Textual Amendments

F68Ss. 126-130 repealed (with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 465, Sch. 3 Pt. 1 (with Sch. 2)

Companies in partnershipU.K.

F69131Companies in partnershipU.K.

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Textual Amendments

F69Ss. 131-133 omitted (retrospective and with effect in accordance with Sch. 24 paras. 12, 13-16 to the amending Act) by virtue of Finance Act 2009 (c. 10), Sch. 24 paras. 8(b), 12

F69132Companies in partnership: supplementaryU.K.

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Textual Amendments

F69Ss. 131-133 omitted (retrospective and with effect in accordance with Sch. 24 paras. 12, 13-16 to the amending Act) by virtue of Finance Act 2009 (c. 10), Sch. 24 paras. 8(b), 12

F69133Relationship with chargeable gainsU.K.

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Textual Amendments

F69Ss. 131-133 omitted (retrospective and with effect in accordance with Sch. 24 paras. 12, 13-16 to the amending Act) by virtue of Finance Act 2009 (c. 10), Sch. 24 paras. 8(b), 12

Chapter 10U.K.Avoidance: miscellaneous

134Finance leasebacksU.K.

(1)After section 228 of the Capital Allowances Act 2001 (c. 2) (sale and leaseback: election) insert—

Finance leaseback: parties' income and profitsU.K.
228AApplication of sections 228B to 228E

(1)Sections 228B to 228E apply where—

(a)plant or machinery is the subject of a sale and finance leaseback for the purposes of section 221, and

(b)section 222 (restriction of disposal value) applies.

(2)Sections 228B to 228D also apply, with the modifications set out in section 228F, where plant or machinery is the subject of a lease and finance leaseback (as defined in section 228F).

228BLessee’s income or profits: deductions

(1)For the purpose of income tax or corporation tax, in calculating the lessee’s income or profits for a period of account the amount deducted in respect of amounts payable under the leaseback may not exceed the permitted maximum.

(2)The permitted maximum is the total of—

(a)finance charges shown in the accounts, and

(b)depreciation, taking the value of the plant or machinery at the beginning of the leaseback to be the restricted disposal value.

(3)In relation to a period of account during which the leaseback terminates, the permitted maximum shall also include an amount calculated in accordance with subsection (4).

(4)The calculation is—

where—

Current Book Value” means the net book value of the leased plant or machinery immediately before the termination,

Original Consideration” means the consideration payable to S for entering into the relevant transaction, and

Original Book Value” means the net book value of the leased plant or machinery at the beginning of the leaseback.

228CLessee’s income or profits: termination of leaseback

(1)Subsection (2) applies where the leaseback terminates.

(2)For the purpose of the calculation of income tax or corporation tax, the income or profits of the lessee from the relevant qualifying activity for the period in which the termination occurs shall be increased by an amount calculated in accordance with subsection (3).

(3)The calculation is—

where—

Net Consideration” means—

  • (a) the consideration payable to S for entering into the relevant transaction, minus

  • (b) the restricted disposal value,

Current Book Value” means the net book value of the leased plant or machinery immediately before the termination, and

Original Book Value” means the net book value of the leased plant or machinery at the beginning of the leaseback.

(4)In this section “relevant qualifying activity” means the qualifying activity for the purposes of which the leased plant or machinery was used immediately before the termination.

(5)Section 228B has no effect on the treatment for the purposes of income tax or corporation tax of amounts received by way of refund on the termination of a leaseback of amounts payable under it.

(6)In subsection (5), “amounts received by way of refund” includes any amount that would be so received in respect of the lessee’s interest under the leaseback if any amounts due to the lessor under the leaseback were disregarded.

228DLessor’s income or profits

(1)This section applies in relation to the calculation of the lessor’s income or profits for a period of account for the purpose of income tax or corporation tax.

(2)Where—

(a)an amount receivable in respect of the lessor’s interest under the leaseback falls to be taken into account in that calculation, and

(b)that amount is reduced by an amount due to the lessee under the leaseback,

that reduction shall be disregarded when taking the amount receivable into account.

(3)The amounts receivable in respect of the lessor’s interest under the leaseback that fall to be taken into account in that calculation may be disregarded to the extent that they exceed the permitted threshold (whether or not subsection (2) applies).

(4)The permitted threshold is the total of—

(a)gross earnings, and

(b)the allowable proportion of the capital repayment.

(5)In subsection (4)(a) “gross earnings” means the amount shown in the lessor’s accounts in respect of the lessor’s gross earnings under the leaseback.

(6)In subsection (4)(b) “allowable proportion of the capital repayment” means the amount obtained by this calculation—

where—

Investment Reduction For Period” means the amount shown in the lessor’s accounts in respect of the reduction in net investment in the leaseback, and

Net Investment” means the amount shown in the lessor’s accounts as the lessor’s net investment in the leaseback at the beginning of its term.

(7)This section does not apply to a leaseback if the lessee is a lessee by way of an assignment made before 17 March 2004.

228ELessor’s income or profits: termination of leaseback

(1)Subsection (2) applies where—

(a)the leaseback terminates,

(b)the lessor disposes of the plant or machinery, and

(c)the amount of the disposal value required to be brought into account because of that disposal is limited by section 62.

(2)For the purpose of income tax or corporation tax, in calculating the lessor’s income or profits for the period in which the termination occurs the amount deducted in respect of any amount refunded to the lessee may not exceed the amount to which the disposal value is limited by section 62.

228FLease and finance leaseback

(1)Sections 228B, 228C and 228D apply, with the following modifications, where plant or machinery is the subject of a lease and finance leaseback.

(2)In determining the permitted maximum for the purposes of section 228B, depreciation shall be disregarded.

(3)In the calculation under section 228C(3), the amount of the consideration referred to in subsection (6)(b) of this section shall be substituted for the Net Consideration.

(4)In determining the permitted threshold for the purposes of section 228D, the allowable proportion of the capital repayment shall be disregarded.

(5)Plant or machinery is the subject of a lease and finance leaseback if—

(a)a person (“S”) leases the plant or machinery to another (“B”),

(b)after the date of that transaction, the use of the plant or machinery falls within sub-paragraph (i), (ii) or (iii) of section 221(1)(b), and

(c)it is directly as a consequence of having been leased under a finance lease that the plant or machinery is available to be so used after that date.

(6)For the purposes of subsection (5), S leases the plant or machinery to B only if—

(a)S grants B rights over the plant or machinery,

(b)consideration is given for that grant, and

(c)S is not required to bring all of that consideration into account under this Part.

(7)Plant or machinery is not the subject of a lease and finance leaseback for the purposes of this section in any case where the condition in subsection (6)(c) is met only because of an election under section 199 made before 18 May 2004.

(8)In the application of sections 228B to 228D in relation to a lease and finance leaseback—

(a)references to the lessee are references to the person referred to as S in this section, and

(b)references to the lessor are references to the person referred to as B in this section or, where appropriate, to an assignee of that person.

228GLeaseback not accounted for as finance lease in accounts of lessee

(1)Sections 228B and 228C are subject to this section in their application in relation to a leaseback that is not accounted for as a finance lease in the accounts of the lessee.

(2)Subsection (3) applies where the leaseback is accounted for as a finance lease in the accounts of a person connected with the lessee; and in that subsection “relevant calculation” means the calculation of—

(a)the permitted maximum for the purposes of section 228B, or

(b)the amount by which the income or profits of the lessee are to be increased in accordance with section 228C.

(3)Where an amount that falls to be used for the purposes of a relevant calculation—

(a)cannot be ascertained by reference to the lessee’s accounts because the leaseback is not accounted for as a finance lease in those accounts, but

(b)can be ascertained by reference to the connected person’s accounts for one or more periods,

that amount as ascertained by reference to the connected person’s accounts shall be used for the purposes of the relevant calculation.

(4)Subsections (5) and (6) apply in a case where the leaseback is not accounted for as a finance lease in the accounts of a person connected with the lessee.

(5)Sections 228B and 228C do not apply in relation to the leaseback.

(6)If the term of the leaseback begins on or after 18 May 2004 then, for the purposes of income tax or corporation tax, the income or profits of the lessee from the relevant qualifying activity for the period of account during which the term of the leaseback begins shall be increased by—

(a)the net consideration for the purposes of section 228C(3) (in the case of a sale and finance leaseback), or

(b)the consideration referred to in section 228F(6)(b) (in the case of a lease and finance leaseback).

(7)For the purposes of this section the leaseback is accounted for as a finance lease in a person’s accounts if—

(a)the leaseback falls, under generally accepted accounting practice, to be treated in that person’s accounts as a finance lease or loan, or

(b)in a case where the leaseback is comprised in other arrangements, those arrangements fall, under generally accepted accounting practice, to be so treated.

228HSections 228A to 228G: supplementary

(1)In sections 228A to 228G—

  • lessee” does not include a person who is lessee by way of an assignment;

  • the “net book value”of leased plant or machinery means the book value of the plant or machinery having regard to any relevant entry in the lessee’s accounts, but—

    (a)

    also having regard to depreciation up to the time in question, and

    (b)

    disregarding any revaluation gains or losses and any impairments;

  • restricted disposal value” means the disposal value under section 222;

  • termination” in relation to a leaseback includes (except in section 228E)—

    (a)

    the assignment of the lessee’s interest,

    (b)

    the making of any arrangements (apart from an assignment of the lessee’s interest) under which a person other than the lessee becomes liable to make some or all payments under the leaseback, and

    (c)

    a variation as a result of which the leaseback ceases to be a finance lease.

(2)In a case where accounts drawn up are not correct accounts, or no accounts are drawn up—

(a)the provisions of sections 228A to 228G apply as if correct accounts had been drawn up, and

(b)amounts referred to in any of those sections as shown in accounts are those that would have been shown in correct accounts.

(3)In a case where accounts are drawn up in reliance upon amounts derived from an earlier period of account for which correct accounts were not drawn up, or no accounts were drawn up, amounts referred to in sections 228A to 228G as shown in the accounts for the later period are those that would have been shown if correct accounts had been drawn up for the earlier period.

(4)In subsections (2) and (3) “correct accounts” means accounts drawn up in accordance with generally accepted accounting practice.

228JPlant or machinery subject to further operating lease

(1)This section applies where—

(a)plant or machinery is the subject of—

(i)a sale and finance leaseback, or

(ii)a lease and finance leaseback, and

(b)some or all of the plant or machinery becomes, while the subject of the leaseback, also the subject of a lease in relation to which the following conditions are met—

(i)the term of the lease begins on or after 18 May 2004;

(ii)S, or a person connected with S, is the lessee under the lease;

(iii)the lease is not accounted for as a finance lease in the accounts of the lessee.

(2)For the purpose of income tax or corporation tax, in calculating the lessee’s income or profits for a period of account the amount deducted in respect of amounts payable under the operating lease shall not exceed the relevant amount.

(3)Subsections (4) and (5) apply in relation to the calculation of the lessor’s income or profits for a period of account for the purpose of income tax or corporation tax.

(4)Where—

(a)an amount receivable in respect of the lessor’s interest under the operating lease falls to be taken into account in that calculation, and

(b)that amount is reduced by an amount due to the lessee under the operating lease,

that reduction shall be disregarded when taking the amount receivable into account.

(5)The amounts receivable in respect of the lessor’s interest under the operating lease that fall to be taken into account in that calculation may be disregarded to the extent that they exceed the relevant amount (whether or not subsection (4) applies).

(6)Where only some of the plant or machinery is the subject of the operating lease, subsections (2) to (5) shall apply subject to such apportionments as may be just and reasonable.

(7)For the purposes of this section a lease is accounted for as a finance lease in a person’s accounts if—

(a)the lease falls, under generally accepted accounting practice, to be treated in that person’s accounts as a finance lease or loan, or

(b)in a case where the lease is comprised in other arrangements, those arrangements fall, under generally accepted accounting practice, to be so treated.

(8)In this section—

  • lease and finance leaseback” has the meaning given in section 228F;

  • lessee” means the lessee under the operating lease;

  • lessor” means the lessor under the operating lease;

  • operating lease” means the lease referred to in subsection (1)(b);

  • relevant amount” means an amount equal to the permitted maximum under section 228B as it applies in relation to the leaseback..

(2)In sections 228A to 228J of the Capital Allowances Act 2001 (c. 2) (as inserted by subsection (1) above), a reference to a provision of that Act includes a reference to an equivalent provision of the Capital Allowances Act 1990 (c. 1) (with any necessary modification).

(3)This section applies to income tax and corporation tax chargeable in relation to periods that end on or after 17 March 2004.

(4)Schedule 23 contains transitional provision.

F70135Rent factoring of leases of plant or machineryU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F70S. 135 omitted (with effect in accordance with Sch. 25 para. 10 of the amending Act) by virtue of Finance Act 2009 (c. 10), Sch. 25 para. 9(3)(d)

136Manufactured dividendsU.K.

Schedule 24 to this Act (which makes provision in relation to cases where payments are or have been made, or treated as made, which are representative of dividends on shares of companies resident in the United Kingdom) has effect.

137Manufactured payments under arrangements having an unallowable purposeU.K.

F71(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F72(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F73(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F73(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F73(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F73(6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F73(7). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F71S. 137(1) repealed (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 3 Pt. 1 (with Sch. 2)

F72S. 137(2) repealed (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 3 Pt. 1 (with Sch. 2 Pts. 1, 2)

F73S. 137(3)-(7) repealed (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 3 Pt. 1 (with Sch. 2)

F74138Gilt stripsU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F75139Gifts of shares, securities and real property to charities etcU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F75S. 139 repealed (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 3 Pt. 1 (with Sch. 2)

F76140Life policies etc.: restriction of corresponding deficiency reliefU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

Chapter 11U.K.Miscellaneous

Reliefs for businessU.K.

F77141Relief for research and development: software and consumable itemsU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F77S. 141 repealed (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 3 Pt. 1 (with Sch. 2 Pts. 1, 2)

F78142Temporary increase in amount of first-year allowances for small enterprisesU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F78S. 142 omitted (21.7.2008) by virtue of Finance Act 2008 (c. 9), s. 75(4)(a)

F79143Deduction for expenditure by landlords on energy-saving itemsU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

144Lloyd’s names: conversion to limited liability underwritingU.K.

Schedule 25 to this Act (which makes provision for certain reliefs to be available where a member of Lloyd’s converts to limited liability underwriting) has effect.

Offshore mattersU.K.

145Offshore fundsU.K.

(1)The provisions of the Taxes Act 1988 relating to offshore funds are amended in accordance with Schedule 26 to this Act.

(2)Except as otherwise provided—

(a)the amendments have effect for account periods (within the meaning of Chapter 5 of Part 17 of that Act) ending on or after the day on which this Act is passed, and

(b)regulations made under a power conferred by virtue of any of the amendments may be made so as to have effect in relation to any such account period.

146Meaning of “offshore installation”U.K.

Schedule 27 to this Act (which makes amendments relating to the meaning of “offshore installation”) has effect.

HealthU.K.

147Immediate needs annuitiesU.K.

F80(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F80(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F81(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F82(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F83(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F83(6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F84148Corporation tax: health service bodiesU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F84S. 148 repealed (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 3 Pt. 1 (with Sch. 2)

Part 4U.K.Pension schemes etc

Modifications etc. (not altering text)

C10Pt. 4 modified (1.7.2008) (N.I.) (with effect in accordance with reg. 1 of the amending Rule) by The Health and Social Care (Pension Scheme) Regulations (Northern Ireland) 2008 (S.R. 2008/256), regs. 1, 124(1) (with regs. 134, 258)

C12Pt. 4 applied (21.7.2009) by Finance Act 2009 (c. 10), Sch. 35 para. 18

C13Pt. 4 modified (19.7.2011) by Finance Act 2011 (c. 11), Sch. 18 para. 14(3)

C14Pt. 4 applied (with modifications) (with application in accordance with Sch. 22 para. 1 of the amending Act) by Finance Act 2013 (c. 29), Sch. 22 para. 1(2)

C15Pt. 4 modified (17.7.2014) by Finance Act 2014 (c. 26), Sch. 6 para. 1(2)(3)

C16Pt. 4: power to amend conferred (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), s. 4(3)

C17Pt. 4 modified (15.9.2016) by Finance Act 2016 (c. 24), Sch. 4 para. 1

C18Pt. 4 modified (15.9.2016) by Finance Act 2016 (c. 24), Sch. 4 para. 9(2)

Chapter 1U.K.Introduction

IntroductoryU.K.

149Overview of Part 4U.K.

(1)This Part contains tax provision about pension schemes and other similar schemes.

(2)This Chapter defines some basic concepts.

(3)As for the rest of this Part—

  • Chapter 2 is about the registration and de-registration of pension schemes,

  • Chapter 3 is about the payments that may be made by registered pension schemes and related matters,

  • Chapter 4 deals with tax reliefs and exemptions in connection with registered pension schemes,

  • Chapter 5 imposes tax charges in connection with registered pension schemes,

  • Chapter 6 is about some schemes that are not registered pension schemes,

  • Chapter 7 makes provision about compliance,and

  • Chapter 8 contains interpretation and other supplementary provisions.

Main conceptsU.K.

150Meaning of “pension scheme”U.K.

(1)In this Part “pension scheme” means a scheme or other arrangements, comprised in one or more instruments or agreements, having or capable of having effect so as to provide benefits to or in respect of persons—

(a)on retirement,

(b)on death,

(c)on having reached a particular age,

(d)on the onset of serious ill-health or incapacity, or

(e)in similar circumstances.

(2)A pension scheme is a registered pension scheme for the purposes of this Part at any time if it is at that time registered under Chapter 2.

(3)In this Part “public service pension scheme” means a pension scheme—

(a)established by or under any enactment,

(b)approved by a relevant governmental or Parliamentary person or body, or

(c)specified in an order made by the Treasury.

(4)In subsection (3) “a relevant governmental or Parliamentary person or body” means—

(a)a Minister of the Crown or a government department,

(b)the Scottish Parliament, the Scottish Parliamentary Corporate Body or a member of the Scottish Executive,

(c)the National Assembly for Wales[F85, the National Assembly for Wales Commission or the Welsh Ministers], or

(d)the Northern Ireland Assembly, the Northern Ireland Assembly Commission, a Northern Ireland Minister, the head of a Northern Ireland department or a Northern Ireland department.

(5)In this Part “occupational pension scheme” means a pension scheme established by an employer or employers and having or capable of having effect so as to provide benefits to or in respect of any or all of the employees of—

(a)that employer or those employers, or

(b)any other employer,

(whether or not it also has or is capable of having effect so as to provide benefits to or in respect of other persons).

[F86(5A)This Part applies in relation to certain pension schemes that are not occupational pension schemes as it applies in relation to occupational pension schemes (see section 274B and paragraph 1(4A) of Schedule 36).]

(6)In this Part “sponsoring employer”, in relation to an occupational pension scheme, means the employer, or any of the employers, to or in respect of any or all of whose employees the pension scheme has, or is capable of having, effect so as to provide benefits.

(7)In this Part “overseas pension scheme” means a pension scheme (other than a registered pension scheme) which—

(a)is established in a country or territory outside the United Kingdom, and

(b)satisfies any requirements prescribed for the purposes of this subsection by regulations made by the Board of Inland Revenue.

(8)In this Part “recognised overseas pension scheme” means an overseas pension scheme [F87which satisfies any requirements prescribed for the purposes of this subsection by regulations made by the Commissioners for Her Majesty's Revenue and Customs.]

151Meaning of “member”U.K.

(1)In this Part “member” in relation to a pension scheme, means any active member, pensioner member, deferred member or pension credit member of the pension scheme.

(2)For the purposes of this Part a person is an active member of a pension scheme if there are presently arrangements made under the pension scheme for the accrual of benefits to or in respect of the person.

(3)For the purposes of this Part a person is a pensioner member of a pension scheme if the person is entitled to the present payment of benefits under the pension scheme and is not an active member.

(4)A person is a deferred member of a pension scheme if the person has accrued rights under the pension scheme and is neither an active member nor a pensioner member.

(5)A person is a pension credit member of a pension scheme if the person has rights under the pension scheme which are attributable (directly or indirectly) to pension credits[F88; and, if a person dies having become entitled to pension credits but without having rights attributable to them, the person is to be treated as having acquired, immediately before death, the rights by virtue of which the liability in respect of the pension credits is subsequently discharged].

Textual Amendments

F88Words in s. 151(5) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 2

Modifications etc. (not altering text)

C19S. 151 applied (with modifications) (6.4.2006) by The Pension Protection Fund (Tax) Regulations 2006 (S.I. 2006/575), regs. 1, 5

152Meaning of “arrangement”U.K.

(1)In this Part “arrangement”, in relation to a member of a pension scheme, means an arrangement relating to the member under the pension scheme.

(2)For the purposes of this Part an arrangement is a “money purchase arrangement” at any time if, at that time, all the benefits that may be provided to or in respect of the member under the arrangement are cash balance benefits or other money purchase benefits.

(3)For the purposes of this Part a money purchase arrangement is a “cash balance arrangement” at any time if, at that time, all the benefits that may be provided to or in respect of the member under the arrangement are cash balance benefits.

(4)In this Part “money purchase benefits”, in relation to a member of a pension scheme, means benefits the rate or amount of which is calculated by reference to an amount available for the provision of benefits to or in respect of the member (whether the amount so available is calculated by reference to payments made under the pension scheme by the member or any other person in respect of the member or any other factor).

(5)In this Part “cash balance benefits” means benefits the rate or amount of which is calculated by reference to an amount available for the provision of benefits to or in respect of the member calculated otherwise than wholly by reference to payments made under the arrangement by the member or by any other person in respect of the member (or transfers or other credits).

(6)For the purposes of this Part an arrangement is a “defined benefits arrangement” at any time if, at that time, all the benefits that may be provided to or in respect of the member under the arrangement are defined benefits.

(7)In this Part “defined benefits”, in relation to a member of a pension scheme, means benefits which are not money purchase benefits (but which are calculated by reference to earnings or service of the member or any other factor other than an amount available for their provision).

(8)For the purposes of this Part an arrangement is a “hybrid arrangement” at any time if, at that time, all of the benefits that may be provided to or in respect of the member under the arrangement are, depending on the circumstances, to be of one of any two or three of the following varieties—

(a)cash balance benefits,

(b)other money purchase benefits, and

(c)defined benefits.

(9)Where not all of the benefits that may be provided under an arrangement to or in respect of the member are of the same one of those varieties of benefits, the arrangement is to be treated for the purposes of this Part as being two or three separate arrangements one of which relates to each of the two or three varieties of benefits that may be so provided.

Modifications etc. (not altering text)

C20S. 152 applied (with modifications) (6.4.2006) by The Pension Protection Fund (Tax) Regulations 2006 (S.I. 2006/575), regs. 1, 6

Chapter 2U.K.Registration of pension schemes

Modifications etc. (not altering text)

RegistrationU.K.

153Registration of pension schemesU.K.

(1)An application may be made to the Inland Revenue for a pension scheme to be registered.

(2)The application—

(a)must contain any information which is reasonably required by the Inland Revenue in any form specified by the Board of Inland Revenue, and

(b)must be accompanied by a declaration that the application is made by the scheme administrator (see section 270) and any other declarations by the scheme administrator which are reasonably required by the Inland Revenue.

(3)The declarations which the Inland Revenue may require to accompany an application for the registration of a pension scheme include, in particular, a declaration that the instruments or agreements by which it is constituted do not entitle any person to unauthorised payments (see section 160(5)).

(4)[F89Following] receipt of an application for a pension scheme to be registered the Inland Revenue must decide whether or not to register the pension scheme.

(5)The Inland Revenue’s decision must be to register the pension scheme unless it appears that—

[F90(a)any information falling within subsection (5A) is inaccurate in a material respect,

(b)any document falling within subsection (5B) contains a material inaccuracy,

(c)any declaration accompanying the application is false,

(d)the scheme administrator has failed to comply with an information notice under section 153A given in connection with the application (including any declaration accompanying it),

(e)the scheme administrator has deliberately obstructed an officer of Revenue and Customs in the course of an inspection under section 153B carried out in connection with the application (including any declaration accompanying it) where the inspection has been approved by the tribunal,

(f)the pension scheme has not been established, or is not being maintained, wholly or mainly for the purpose of making payments falling within section 164(1)(a) or (b) (authorised payments of pensions and lump sums), or

(g)the person who is, or any of the persons who are, the scheme administrator is not a fit and proper person to be, as the case may be—

(i)the scheme administrator, or

(ii)one of the persons who are the scheme administrator] [F91, or

(h)the pension scheme is an occupational pension scheme, and a sponsoring employer in relation to the scheme is a body corporate that has been dormant during a continuous period of one month that falls within the period of one year ending with the day on which the decision is made, or

(i)the pension scheme is an unauthorised Master Trust scheme.]

[F92(5A)The information falling within this subsection is any information—

(a)contained in the application, or

(b)otherwise provided to an officer of Revenue and Customs by the scheme administrator (whether under section 153A or otherwise) in connection with the application (including any declaration accompanying it).

(5B)The documents falling within this subsection are any documents produced to an officer of Revenue and Customs by the scheme administrator (whether under section 153A or otherwise) in connection with the application (including any declaration accompanying it).

(5C)The reference in subsection (5)(d) to the scheme administrator having failed to comply with an information notice under section 153A includes a case where the scheme administrator has concealed, destroyed or otherwise disposed of, or has arranged for the concealment, destruction or disposal of, a document in breach of paragraph 42 or 43 of Schedule 36 to the Finance Act 2008 as applied by section 153A(3).]

(6)The Inland Revenue must notify the scheme administrator of the decision on the application.

(7)Unless the Inland Revenue’s decision is not to register the pension scheme, the notification must state the day on and after which the pension scheme will be a registered pension scheme.

(8)An annuity contract [F93made with an insurance company]

(a)by means of which benefits under a registered pension scheme have been secured, but

(b)which does not provide for the immediate payment of benefits,

is to be treated as having become a registered pension scheme on the day on which it is made.

[F94(8A)Where an order has been made under section 19(4) or 21(2)(a) of the Pensions Act 2004 or Article 15(4) or 17(2)(a) of the Pensions (Northern Ireland) Order 2005 (restitution by order of court or Pensions Regulator) that property or money be transferred, or a sum be paid, towards an annuity contract made with an insurance company, the annuity contract is to be treated as having become a registered pension scheme on the day on which it is made.]

(9)Schedule 36 contains (in Part 1) provisions treating certain pension schemes in existence immediately before 6th April 2006 as registered pension schemes (and related provisions).

Textual Amendments

F89Word in s. 153(4) substituted (with effect in accordance with Sch. 7 para. 5(1) of the amending Act) by Finance Act 2014 (c. 26), Sch. 7 paras. 2(2), 5(1)

F90S. 153(5)(a)-(g) substituted for s. 153(5)(a) (with effect in accordance with Sch. 7 para. 5 of the amending Act) by Finance Act 2014 (c. 26), Sch. 7 paras. 2(3), 5(1)

F91S. 153(5)(h)(i) and word inserted (15.3.2018 for specified purposes, 6.4.2018 in so far as not already in force) by Finance Act 2018 (c. 3), Sch. 3 paras. 1(3), 2(1)(a)(2)(a)(3)

F92S. 153(5A)-(5C) inserted (with effect in accordance with Sch. 7 para. 5(1) of the amending Act) by Finance Act 2014 (c. 26), Sch. 7 paras. 2(4), 5(1)

F93Words in s. 153(8) inserted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 2, 64(1)

F94S. 153(8A) inserted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 3, 64(1)

[F95153APower to require information or documents in relation to applications for registrationU.K.

(1)This section applies where an application for a pension scheme to be registered is made.

(2)An officer of Revenue and Customs may by notice (an “information notice”) require the scheme administrator or any other person—

(a)to provide the officer with any information, or

(b)to produce a document to the officer,

if the officer reasonably requires the information or document in connection with the application (including any declaration accompanying it).

(3)Paragraphs 6(2), 7, 8, 15, 16, 18 to 20, 23 to 27, 42 and 43 of Schedule 36 to the Finance Act 2008 (information notices etc) apply in relation to information notices under this section as they apply in relation to information notices under that Schedule.

(4)Where an information notice under this section is given to a person other than the scheme administrator, an officer of Revenue and Customs must give a copy of the notice to the scheme administrator.

(5)A person, other than the scheme administrator, who is given an information notice under this section may appeal against the notice or any requirement in the notice.

(6)Paragraph 32 of Schedule 36 to the Finance Act 2008 (procedures for appeals against information notices) applies for the purposes of an appeal under subsection (5) as it applies for the purposes of an appeal under Part 5 of that Schedule.

Textual Amendments

F95Ss. 153A-153F inserted (with effect in accordance with Sch. 7 para. 5(1) of the amending Act) by Finance Act 2014 (c. 26), Sch. 7 paras. 3, 5(1)

153BPower to inspect documents in relation to applications for registrationU.K.

(1)This section applies where an application for a pension scheme to be registered is made.

(2)An officer of Revenue and Customs may—

(a)enter any business premises of the scheme administrator or any other person, and

(b)inspect documents that are on the premises,

if the officer reasonably requires to inspect the documents in connection with the application (including any declaration accompanying it).

(3)In subsection (2)(a) “business premises” has the meaning given by paragraph 10(3) of Schedule 36 to the Finance Act 2008 (power to inspect business premises etc).

(4)Paragraphs 10(2), 12, 15 and 16 of Schedule 36 to the Finance Act 2008 apply in relation to the power of inspection conferred by this section as they apply in relation to the power of inspection conferred by paragraph 10 of that Schedule.

(5)An officer of Revenue and Customs may not inspect a document under this section if or to the extent that, by virtue of a provision of Part 4 of Schedule 36 to the Finance Act 2008 (restrictions on powers) applied by section 153A(3), an information notice under section 153A given at the time of the inspection to the occupier of the premises could not require the occupier to produce the document.

(6)An officer of Revenue and Customs may ask the tribunal to approve an inspection under this section.

(7)Paragraph 13(1A), (2) and (3) of Schedule 36 to the Finance Act 2008 (approval of tribunal for inspections) applies in relation to an application under subsection (6) as it applies in relation to an application under paragraph 13 of that Schedule in relation to an inspection under paragraph 10 of that Schedule.

Textual Amendments

F95Ss. 153A-153F inserted (with effect in accordance with Sch. 7 para. 5(1) of the amending Act) by Finance Act 2014 (c. 26), Sch. 7 paras. 3, 5(1)

153CPenalties for failure to comply with information notices etcU.K.

(1)This section applies where a person other than the scheme administrator—

(a)fails to comply with an information notice under section 153A, or

(b)deliberately obstructs an officer of Revenue and Customs in the course of an inspection under section 153B that has been approved by the tribunal.

(2)The reference in subsection (1)(a) to a person who fails to comply with an information notice includes a person who conceals, destroys or otherwise disposes of, or arranges for the concealment, destruction or disposal of, a document in breach of paragraph 42 or 43 of Schedule 36 to the Finance Act 2008 as applied by section 153A(3).

(3)Paragraphs 39(2), 40 and 44 to 49 of Schedule 36 to the Finance Act 2008 (penalties for failure to comply with information notice etc) apply in relation to the failure or obstruction as they apply in relation to a failure or obstruction mentioned in paragraph 39(1) of that Schedule.

Textual Amendments

F95Ss. 153A-153F inserted (with effect in accordance with Sch. 7 para. 5(1) of the amending Act) by Finance Act 2014 (c. 26), Sch. 7 paras. 3, 5(1)

153DPenalties for inaccurate information in applicationsU.K.

(1)This section applies where—

(a)an application under section 153 contains information which is inaccurate,

(b)the inaccuracy is material, and

(c)condition A, B or C is met.

(2)Condition A is that the inaccuracy is careless or deliberate.

(3)An inaccuracy is careless if it is due to a failure by the scheme administrator to take reasonable care.

(4)Condition B is that the scheme administrator knows of the inaccuracy at the time the application is made but does not inform an officer of Revenue and Customs at that time.

(5)Condition C is that the scheme administrator—

(a)discovers the inaccuracy some time later, and

(b)fails to take reasonable steps to inform an officer of Revenue and Customs.

(6)The scheme administrator is liable to a penalty not exceeding the maximum penalty for which the scheme administrator could have been liable under paragraph 40A of Schedule 36 to the Finance Act 2008 (penalties for inaccurate information and documents) had that paragraph applied in relation to the inaccuracy.

(7)Where the information contains more than one material inaccuracy, a penalty is payable for each inaccuracy.

(8)Paragraphs 46 to 49 of Schedule 36 to the Finance Act 2008 (assessment of penalties etc) apply in relation to a penalty under this section as they apply in relation to a penalty under paragraph 40A of that Schedule.

Textual Amendments

F95Ss. 153A-153F inserted (with effect in accordance with Sch. 7 para. 5(1) of the amending Act) by Finance Act 2014 (c. 26), Sch. 7 paras. 3, 5(1)

153EPenalties for inaccurate information or documents provided under information noticeU.K.

(1)This section applies where—

(a)in complying with an information notice under section 153A, a person provides inaccurate information or produces a document that contains an inaccuracy, and

(b)the inaccuracy is material.

(2)Paragraphs 40A and 46 to 49 of Schedule 36 to the Finance Act 2008 (penalties for inaccurate information and documents) apply in relation to the inaccuracy as they apply in relation to an inaccuracy connected with an information notice under that Schedule.

Textual Amendments

F95Ss. 153A-153F inserted (with effect in accordance with Sch. 7 para. 5(1) of the amending Act) by Finance Act 2014 (c. 26), Sch. 7 paras. 3, 5(1)

153FPenalties for false declarationsU.K.

(1)This section applies where—

(a)a declaration accompanying an application under section 153 is false, and

(b)at least one of conditions A to C in section 153D is met (reading references to an inaccuracy as references to a falsehood and references to the scheme administrator as references to the person who made the declaration).

(2)The person who made the declaration is liable to a penalty not exceeding the maximum penalty for which the person could have been liable under paragraph 40A of Schedule 36 to the Finance Act 2008 (penalties for inaccurate information and documents) had that paragraph applied in relation to the falsehood.

(3)Where the declaration contains more than one falsehood, a penalty is payable in relation to each falsehood.

(4)Paragraphs 46 to 49 of Schedule 36 to the Finance Act 2008 (assessment of penalties etc) apply in relation to a penalty under this section as they apply in relation to a penalty under paragraph 40A of that Schedule.]

Textual Amendments

F95Ss. 153A-153F inserted (with effect in accordance with Sch. 7 para. 5(1) of the amending Act) by Finance Act 2014 (c. 26), Sch. 7 paras. 3, 5(1)

154Persons by whom registered pension scheme may be establishedU.K.

[F96(1)An application to register a pension scheme may be made only if the pension scheme—

(a)is an occupational pension scheme, or

(b)has been established by a person with permission under FISMA 2000 to establish in the United Kingdom a personal pension scheme or a stakeholder pension scheme.]

(2)But subsection (1) does not apply to a public service pension scheme.

[F97(2A)Subsection (1) is to be construed in accordance with section 22 of FISMA 2000, any relevant order under that section and Schedule 2 to that Act.]

F98(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4)The Treasury may by order amend this section F99....

Textual Amendments

F96S. 154(1) substituted (retrospective to 6.4.2007) by Finance Act 2007 (c. 11), Sch. 20 paras. 2(2), 24(1)

F97S. 154(2A) inserted (retrospective to 6.4.2007) by Finance Act 2007 (c. 11), Sch. 20 paras. 2(3), 24(1)

F98S. 154(3) repealed (retrospective to 6.4.2007) by Finance Act 2007 (c. 11), Sch. 20 paras. 2(4), 24(1), Sch. 27 Pt. 3(2)

F99Words in s. 154(4) repealed (retrospective to 6.4.2007) by Finance Act 2007 (c. 11), Sch. 20 paras. 2(5), 24(1), Sch. 27 Pt. 3(2)

F100155Persons by whom scheme may be established: supplementaryU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F100S. 155 repealed (retrospective to 6.4.2007) by Finance Act 2007 (c. 11), Sch. 20 paras. 324(1), Sch. 27 Pt. 3(2)

156Appeal against decision not to registerU.K.

(1)This section applies where, on an application for a pension scheme to be registered, the Inland Revenue’s decision is not to register the pension scheme.

(2)The scheme administrator may appeal against the decision.

F101(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F101(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5)An appeal under this section against a decision must be brought within the period of 30 days beginning with the day on which the scheme administrator was notified of the decision.

(6)[F102On an appeal under this section that is notified to the tribunal, the tribunal] must consider whether the pension scheme ought to have been registered by the Inland Revenue.

(7)If [F103the tribunal decides] that the pension scheme ought not to have been registered by the Inland Revenue, [F104the tribunal must] dismiss the appeal.

(8)If [F105the tribunal decides] that the pension scheme ought to have been registered by the Inland Revenue, the pension scheme is to be treated as having been registered on such date as the [F106tribunal determines] (but subject to any further appeal F107...).

[F108156ACases where application for registration not decided within 6 monthsU.K.

(1)This section applies where—

(a)an application for a pension scheme to be registered is made, but

(b)the scheme administrator is not notified under section 153(6) within the period of 6 months after the day on which the application is made.

(2)The scheme administrator may appeal to the tribunal as if, at the end of that period of 6 months, the scheme administrator had been notified under section 153(6) of a decision not to register the scheme; and section 156(5) to (8) applies accordingly.]

Textual Amendments

F108S. 156A inserted (with effect in accordance with Sch. 7 para. 5(1) of the amending Act) by Finance Act 2014 (c. 26), Sch. 7 paras. 4, 5(1)

De-registrationU.K.

157De-registrationU.K.

(1)The Inland Revenue may withdraw the registration of a pension scheme.

(2)If the Inland Revenue withdraws the registration of a pension scheme the Inland Revenue must notify the scheme administrator.

(3)If there is no-one who is the scheme administrator, the Inland Revenue must instead notify any person or persons—

(a)who has or have responsibility for the discharge of any obligation relating to the pension scheme under section 271(4) (continuation of liability where no scheme administrator), section 272 (trustees etc.) or section 273 (members), and

(b)whom it is reasonably practicable for the Inland Revenue to identify.

(4)The notification must state the date on and after which the pension scheme will not be a registered pension scheme.

158Grounds for de-registrationU.K.

(1)The registration of a pension scheme may be withdrawn under section 157 only if it appears to the Inland Revenue—

[F109(za)that the pension scheme has not been established, or is not being maintained, wholly or mainly for the purpose of making payments falling within section 164(1)(a) or (b) (authorised payments of pensions and lump sums),]

[F110(zb)that the person who is, or any of the persons who are, the scheme administrator is not a fit and proper person to be, as the case may be—

(i)the scheme administrator, or

(ii)one of the persons who are the scheme administrator,]

(a)that the amount of the scheme chargeable payments (see section 241) made by the pension scheme during any period of 12 months exceeds the de-registration threshold,

(b)that the scheme administrator fails to pay a substantial amount of tax (or interest on tax) due from the scheme administrator by virtue of this Part,

(c)that the scheme administrator fails to provide information required to be provided to the Inland Revenue by virtue of this Part [F111or Part 1 of Schedule 36 to the Finance Act 2008] and the failure is significant,

(d)that any information contained in the application to register the pension scheme or otherwise provided to the Inland Revenue is [F112inaccurate] in a material particular,

[F113(da)that the scheme administrator fails to produce any document required to be produced to an officer of Revenue and Customs by virtue of this Part or Part 1 of Schedule 36 to the Finance Act 2008,

(db)that any document produced to an officer of Revenue and Customs by the scheme administrator contains a material inaccuracy in relation to which at least one of conditions A to C in subsections (7) to (10) is met,]

[F114(e)that any declaration accompanying the application to register the pension scheme, or otherwise made to an officer of Revenue and Customs in connection with the pension scheme, is false in a material particular,

(ea)that the scheme administrator has deliberately obstructed an officer of Revenue and Customs in the course of an inspection under [F115section 159B or] Part 2 of Schedule 36 to the Finance Act 2008 that has been approved by the tribunal, or]

(f)that there is no scheme administrator[F116, or

(g)that the pension scheme is an occupational pension scheme, and a sponsoring employer in relation to the scheme is a body corporate that has been dormant during a continuous period of one month that falls within the period of one year ending with the day on which the decision to withdraw registration is made, or

(h)that the scheme is an unauthorised Master Trust scheme.]

(2)The amount of the scheme chargeable payments made by a pension scheme during any period of 12 months exceeds the de-registration threshold if the scheme chargeable payments percentage is 25% or more.

(3)The scheme chargeable payments percentage is—

(a)if only one scheme chargeable payment is made during the period of 12 months, the percentage of the pension fund used up on the occasion of that scheme chargeable payment, and

(b)if two or more scheme chargeable payments are made during the period of 12 months, the aggregate of the percentages of the pension fund used up on the occasion of each of those scheme chargeable payments.

(4)The percentage of the pension fund used up on the occasion of a scheme chargeable payment is—

where—

SCP is the amount of the scheme chargeable payment, and

AA is an amount equal to the aggregate of the amount of the sums and the market value of the assets held for the purposes of the pension scheme at the time when the scheme chargeable payment is made.

(5)A failure by a scheme administrator to provide information required to be provided to the Inland Revenue by or under this Part [F117or Part 1 of Schedule 36 to the Finance Act 2008] is significant if—

(a)the amount of information which the scheme administrator fails to provide is substantial, or

(b)the failure to provide the information is likely to result in serious prejudice to the assessment or collection of tax.

[F118(6)Subsections (7) to (10) apply for the purposes of subsection (1)(db).

(7)Condition A is that the inaccuracy is careless or deliberate.

(8)An inaccuracy is careless if it is due to a failure by the scheme administrator to take reasonable care.

(9)Condition B is that the scheme administrator knows of the inaccuracy at the time the document is produced to an officer of Revenue and Customs but does not inform such an officer at that time.

(10)Condition C is that the scheme administrator—

(a)discovers the inaccuracy some time later, and

(b)fails to take reasonable steps to inform an officer of Revenue and Customs.]

Textual Amendments

F109S. 158(1)(za) inserted (with effect in accordance with Sch. 7 para. 8(1) of the amending Act) by Finance Act 2014 (c. 26), Sch. 7 paras. 6(2)(a), 8(2)

F110S. 158(1)(zb) inserted (1.9.2014) (with effect in accordance with Sch. 7 para. 8(1) of the amending Act) by Finance Act 2014 (c. 26), Sch. 7 paras. 6(3)(a), 8(3)

F111Words in s. 158(1)(c) inserted (with effect in accordance with art. 1(2) of the amending S.I.) by The Pension Schemes (Miscellaneous Amendments) Order 2013 (S.I. 2013/1114), arts. 1(1), 2(2)

F112Word in s. 158(1)(d) substituted (with effect in accordance with Sch. 7 para. 8(1) of the amending Act) by Finance Act 2014 (c. 26), Sch. 7 paras. 6(2)(b), 8(2)

F113S. 158(1)(da)(db) inserted (with effect in accordance with Sch. 7 para. 8(1) of the amending Act) by Finance Act 2014 (c. 26), Sch. 7 paras. 6(2)(c), 8(2)

F114S. 158(1)(e)(ea) substituted for s. 158(1)(e) (with effect in accordance with Sch. 7 para. 8(1) of the amending Act) by Finance Act 2014 (c. 26), Sch. 7 paras. 6(2)(d), 8(2)

F115Words in s. 158(1)(ea) inserted (1.9.2014) (with effect in accordance with Sch. 7 para. 8(1) of the amending Act) by Finance Act 2014 (c. 26), Sch. 7 paras. 6(3)(b), 8(3)

F116S. 158(1)(g)(h) and word inserted (15.3.2018 for specified purposes, 6.4.2018 in so far as not already in force) by Finance Act 2018 (c. 3), Sch. 3 paras. 1(4), 2(1)(b)(2)(b)(3)

F117Words in s. 158(5) inserted (with effect in accordance with art. 1(2) of the amending S.I.) by The Pension Schemes (Miscellaneous Amendments) Order 2013 (S.I. 2013/1114), arts. 1(1), 2(3)

F118S. 158(6)-(10) inserted (with effect in accordance with Sch. 7 para. 8(1) of the amending Act) by Finance Act 2014 (c. 26), Sch. 7 paras. 6(4), 8(2)

159Appeal against decision to de-registerU.K.

(1)This section applies where the Inland Revenue decides to withdraw the registration of a pension scheme under section 157.

(2)The scheme administrator, or any person notified under that section of the withdrawal of registration, may appeal against the decision.

F119(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F119(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5)An appeal under this section against a decision must be brought within the period of 30 days beginning with the day on which the appellant was notified of the decision.

(6)[F120On an appeal that is notified to the tribunal, the tribunal] must consider whether the registration of the pension scheme ought to have been withdrawn.

(7)If [F121the tribunal decides] that the registration of the pension scheme ought to have been withdrawn, [F122the tribunal must] dismiss the appeal.

(8)If [F123the tribunal decides] that the registration of the pension scheme ought not to have been withdrawn, the pension scheme is to be treated as having remained a registered pension scheme (but subject to any further appeal F124...).

[F125159APower to require information or documents for purpose of considering if scheme administrator is fit and properU.K.

(1)An officer of Revenue and Customs may by notice (an “information notice”) require the scheme administrator of a registered pension scheme or any other person—

(a)to provide the officer with any information, or

(b)to produce a document to the officer,

if the officer reasonably requires the information or document for the purpose of considering whether the person who is, or any of the persons who are, the scheme administrator is a fit and proper person to be the scheme administrator or one of those persons (as the case may be).

(2)Paragraphs 6(2), 7, 8, 15, 16, 18 to 20, 23 to 27, 42 and 43 of Schedule 36 to the Finance Act 2008 (information notices etc) apply in relation to information notices under this section as they apply in relation to information notices under that Schedule.

(3)Where an information notice under this section is given to a person other than the scheme administrator, an officer of Revenue and Customs must give a copy of the notice to the scheme administrator.

(4)A person who is given an information notice under this section may appeal against the notice or any requirement in the notice.

(5)Paragraph 32 of Schedule 36 to the Finance Act 2008 (procedures for appeals against information notices) applies for the purposes of an appeal under subsection (4) as it applies for the purposes of an appeal under Part 5 of that Schedule.

Textual Amendments

F125Ss. 159A-159D inserted (1.9.2014) (with effect in accordance with Sch. 7 para. 8(1) of the amending Act) by Finance Act 2014 (c. 26), Sch. 7 paras. 7, 8(3)

159BPower to inspect documents for purpose of considering if scheme administrator is fit and properU.K.

(1)An officer of Revenue and Customs may—

(a)enter any business premises of the scheme administrator of a registered pension scheme or of any other person, and

(b)inspect documents that are on the premises,

if the officer reasonably requires to inspect the documents for the purpose of considering whether the person who is, or any of the persons who are, the scheme administrator is a fit and proper person to be the scheme administrator or one of those persons (as the case may be).

(2)In subsection (1)(a) “business premises” has the meaning given by paragraph 10(3) of Schedule 36 to the Finance Act 2008 (power to inspect business premises etc).

(3)Paragraphs 10(2), 12, 15 and 16 of Schedule 36 to the Finance Act 2008 apply in relation to the power of inspection conferred by this section as they apply in relation to the power of inspection conferred by paragraph 10 of that Schedule.

(4)An officer of Revenue and Customs may not inspect a document under this section if or to the extent that, by virtue of a provision of Part 4 of Schedule 36 to the Finance Act 2008 (restrictions on powers) applied by section 159A(2), an information notice under section 159A given at the time of the inspection to the occupier of the premises could not require the occupier to produce the document.

(5)An officer of Revenue and Customs may ask the tribunal to approve an inspection under this section.

(6)Paragraph 13(1A), (2) and (3) of Schedule 36 to the Finance Act 2008 (approval of tribunal for inspections) applies in relation to an application under subsection (5) as it applies in relation to an application under paragraph 13 of that Schedule in relation to an inspection under paragraph 10 of that Schedule.

Textual Amendments

F125Ss. 159A-159D inserted (1.9.2014) (with effect in accordance with Sch. 7 para. 8(1) of the amending Act) by Finance Act 2014 (c. 26), Sch. 7 paras. 7, 8(3)

159CPenalties for failure to comply with information notices etcU.K.

(1)This section applies where a person—

(a)fails to comply with an information notice under section 159A, or

(b)deliberately obstructs an officer of Revenue and Customs in the course of an inspection under section 159B that has been approved by the tribunal.

(2)The reference in subsection (1)(a) to a person who fails to comply with an information notice includes a person who conceals, destroys or otherwise disposes of, or arranges for the concealment, destruction or disposal of, a document in breach of paragraph 42 or 43 of Schedule 36 to the Finance Act 2008 as applied by section 159A(2).

(3)Paragraphs 39(2), 40 and 44 to 49 of Schedule 36 to the Finance Act 2008 (penalties for failure to comply with information notice etc) apply in relation to the failure or obstruction as they apply in relation to a failure or obstruction mentioned in paragraph 39(1) of that Schedule.

Textual Amendments

F125Ss. 159A-159D inserted (1.9.2014) (with effect in accordance with Sch. 7 para. 8(1) of the amending Act) by Finance Act 2014 (c. 26), Sch. 7 paras. 7, 8(3)

159DPenalties for inaccurate information or documents provided under information noticeU.K.

(1)This section applies where—

(a)in complying with an information notice under section 159A, a person provides inaccurate information or produces a document that contains an inaccuracy, and

(b)the inaccuracy is material.

(2)Paragraphs 40A and 46 to 49 of Schedule 36 to the Finance Act 2008 (penalties for inaccurate information and documents) apply in relation to the inaccuracy as they apply in relation to an inaccuracy connected with an information notice under that Schedule.]

Textual Amendments

F125Ss. 159A-159D inserted (1.9.2014) (with effect in accordance with Sch. 7 para. 8(1) of the amending Act) by Finance Act 2014 (c. 26), Sch. 7 paras. 7, 8(3)

Chapter 3U.K.Payments by registered pension schemes

IntroductoryU.K.

160Payments by registered pension schemesU.K.

(1)The only payments which a registered pension scheme is authorised to make to or in respect of a [F126person who is or has been a] member of the pension scheme are those specified in section 164.

(2)In this Part “unauthorised member payment” means—

(a)a payment by a registered pension scheme to or in respect of a [F127person who is or has been a] member of the pension scheme which is not authorised by section 164, and

(b)anything which is to be treated as an unauthorised payment to or in respect of a [F128person who is or has been a] member of the pension scheme under [F129this Part].

(3)The only payments which a registered pension scheme that is an occupational pension scheme is authorised to make to or in respect of a [F130person who is or has been a] sponsoring employer are those specified in section 175.

(4)In this Part “unauthorised employer payment” means—

(a)a payment by a registered pension scheme that is an occupational pension scheme, to or in respect of a [F131person who is or has been a] sponsoring employer, which is not authorised by section 175, and

(b)anything which is to be treated as an unauthorised payment to a [F132person who is or has been a] sponsoring employer under section 181.

[F133(4A)If an unauthorised member payment or unauthorised employer payment made to or in respect of a person would have been greater but for a reduction made in respect of the whole, or any proportion, of the amount which the scheme administrator considers may be the amount of the liability to the scheme sanction charge in respect of it, it is to be regarded for the purposes of this Part as increased by the amount of the reduction.

(4B)But if the amount, or that proportion of the amount, of that liability is in fact less than the amount of the reduction, a subsequent payment of an amount not exceeding the difference between that amount and the amount of the reduction made—

(a)to or in respect of the same person, and

(b)before the end of the period of two years beginning with the date on which the unauthorised member payment or unauthorised employer payment was made,

is not to be regarded for the purposes of this Part as an unauthorised member payment or unauthorised employer payment.]

(5)In this Part “unauthorised payment” means—

(a)an unauthorised member payment, or

(b)an unauthorised employer payment.

(6)As well as section 157 (de-registration), the following provisions—

(a)section 208 (unauthorised payments charge),

(b)section 209 (unauthorised payments surcharge),

(c)section 239 (scheme sanction charge), and

(d)section 242 (de-registration charge),

specify consequences of making unauthorised payments.

(7)Sections 182 to 185 contain provision about amounts that a registered pension scheme is not authorised to borrow.

[F134(7A)Sections 185A to 185I contain provision about the receipt of income and gains from taxable property.]

(8)As well as section 157, sections 239 and 242 specify consequences of unauthorised borrowing [F135and the receipt of income and gains from taxable property].

(9)Schedule 36 contains (in Parts 3 and 4) transitional provision about unauthorised payments.

Textual Amendments

F126Words in s. 160(1) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 3(2)

F127Words in s. 160(2)(a) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 3(3)(a)

F128Words in s. 160(2)(b) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 3(3)(a)

F129Words in s. 160(2)(b) substituted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 3(3)(b)

F130Words in s. 160(3) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 3(4)

F131Words in s. 160(4)(a) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 3(4)

F132Words in s. 160(4)(b) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 3(4)

F133S. 160(4A)(4B) inserted (19.7.2007) (with effect in accordance with Sch. 20 para. 24(2) of the amending Act) by Finance Act 2007 (c. 11), Sch. 20 para. 5

F134S. 160(7A) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 158(2), Sch. 21 para. 3(2)

F135Words in s. 160(8) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 158(2), Sch. 21 para. 3(3)

Commencement Information

I13Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

161Meaning of “payment” etcU.K.

(1)This section applies for the interpretation of this Chapter.

(2)Payment” includes a transfer of assets and any other transfer of money’s worth.

(3)Subsection (4) applies to a payment made or benefit provided under or in connection with an investment (including an insurance contract or annuity) acquired using sums or assets held for the purposes of a registered pension scheme.

(4)The payment or benefit is to be treated as made or provided from sums or assets held for the purposes of the pension scheme, even if the pension scheme has been wound up since the investment was acquired.

(5)A payment made by a registered pension scheme to [F136or in respect of] a person who—

(a)is connected with a [F137person who is or has been a] member or sponsoring employer (or was connected with [F138such a person at the date of the person's] death), and

(b)is not a [F137person who is or has been a] member or sponsoring employer,

is to be treated as made in respect of the [F137person who is or has been a] member or sponsoring employer.

(6)Any asset held by a person connected with a [F139person who is or has been a] member or sponsoring employer (or who was connected with [F140such a person at the date of the person's] death) is to be treated as held for the benefit of the [F139person who is or has been a] member or sponsoring employer.

(7)Any increase in the value of an asset held by, or reduction in the liability of, a person connected with a [F141person who is or has been a] member or sponsoring employer (or who was connected with [F142such a person at the date of the person's] death) is to be treated as an increase or reduction for the benefit of the [F141person who is or has been a] member or sponsoring employer.

[F143(8)For the purposes of this section whether a person is connected with another person is determined in accordance with section 993 of ITA 2007.]

Textual Amendments

F136Words in s. 161(5) inserted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 5, 64(1)

F137Words in s. 161(5) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 4(2)(a)

F138Words in s. 161(5) substituted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 4(2)(b)

F139Words in s. 161(6) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 4(3)(a)

F140Words in s. 161(6) substituted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 4(3)(b)

F141Words in s. 161(7) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 4(3)(a)

F142Words in s. 161(7) substituted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 4(3)(b)

F143S. 161(8) substituted (with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 467 (with Sch. 2)

Modifications etc. (not altering text)

Commencement Information

I14Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

162Meaning of “loan”U.K.

(1)This section applies for the interpretation of this Chapter.

(2)Loan” does not include the purchase of or subscription to debentures, debenture stock, loan stock, bonds, certificates of deposit or other instruments creating or acknowledging indebtedness which are—

(a)listed or dealt in on a recognised stock exchange (within the meaning of [F144section 1005 of ITA 2007]), or

(b)offered to the public.

(3)A guarantee of a loan made to or in respect of a [F145person who is or has been a] member or sponsoring employer of a registered pension scheme [F146, or to or in respect of a person who is connected with a [F145person who is or has been a] member or sponsoring employer of a registered pension scheme but is not [F147such a person],] is to be treated as a loan to or in respect of the [F145person who is or has been a] member or sponsoring employer of an amount equal to the amount guaranteed.

(4)If a [F148person who is or has been a] member or sponsoring employer of a registered pension scheme [F149or a person who is connected with a [F148person who is or has been a] member or sponsoring employer of a registered pension scheme but is not [F150such a person]]

(a)is liable to pay a debt, the right to payment of which constitutes an asset held for the purposes of the pension scheme, but

(b)is not required to pay it by the relevant date,

the debt is to be treated as a loan made by the pension scheme to the [F148person who is or has been a] member or sponsoring employer on that date.

(5)The relevant date is the date by which a person at arm’s length from the pension scheme might be expected to be required to pay the debt.

[F151(6)For the purposes of this section whether a person is connected with another person is determined in accordance with section 993 of ITA 2007.]

Textual Amendments

F144Words in s. 162(2)(a) substituted (with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 468(2) (with Sch. 2)

F145Words in s. 162(3) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 5(a)

F146Words in s. 162(3) inserted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 6(2), 64(1)

F147Words in s. 162(3) substituted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 5(b)

F148Words in s. 162(4) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 5(a)

F149Words in s. 162(4) inserted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 6(3), 64(1)

F150Words in s. 162(4) substituted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 5(b)

F151S. 162(6) substituted (with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 468(3) (with Sch. 2)

Commencement Information

I15Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

163Meaning of “borrowing” etcU.K.

(1)This section applies for the interpretation of this Chapter.

(2)Borrowing is borrowing by a registered pension scheme if the amount borrowed is to be repaid from sums or assets held for the purposes of the pension scheme.

(3)A liability is a liability of a registered pension scheme if the liability is to be met from sums or assets held for the purposes of the pension scheme.

(4)Borrowing by a registered pension scheme is in respect of an arrangement if it is properly attributable to the arrangement in accordance with the provisions of the pension scheme and any just and reasonable apportionment.

Modifications etc. (not altering text)

C24S. 163(2) applied (retrospective to 6.4.2011) by Finance Act 2011 (c. 11), s. 68(5)(6)

Commencement Information

I16Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

Authorised member paymentsU.K.

164Authorised member paymentsU.K.

[F152(1)]The only payments a registered pension scheme is authorised to make to or in respect of a [F153person who is or has been a] member of the pension scheme are—

(a)pensions permitted by the pension rules or the pension death benefit rules [F154to be paid to or in respect of a member] (see sections 165 and 167),

(b)lump sums permitted by the lump sum rule or the lump sum death benefit rule [F155to be paid to or in respect of a member] (see sections 166 and 168),

(c)recognised transfers (see section 169),

(d)scheme administration member payments (see section 171),

(e)payments pursuant to a pension sharing order or provision, and

(f)payments of a description prescribed by regulations made by the Board of Inland Revenue.

[F156(2)Regulations under subsection (1)(f) may—

(a)provide that for the purposes of Part 9 of ITEPA 2003 all or part of a prescribed payment is to be treated as pension under a registered pension scheme, or as a lump sum of a prescribed description,

(b)provide that all or part of a prescribed payment is subject to the short service refund lump sum chargeF157... or the special lump sum death benefits charge,

(c)provide that a prescribed event in relation to a prescribed payment is to be treated for the purposes of the lifetime allowance charge as a benefit crystallisation event, and make provision as to the amount crystallised by that event,

F158(d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

and “prescribed” means prescribed in regulations under subsection (1)(f).]

[F159(3)The Commissioners for Her Majesty's Revenue and Customs may by regulations make provision—

(a)having the effect that the making of a prescribed authorised payment does not (directly or indirectly) result in an individual first flexibly accessing pension rights for the purposes of sections 227B to 227F,

(b)having the effect that the making of a prescribed authorised payment is not a relevant withdrawal for the purposes of section 579CA of ITEPA 2003, and

(c)having the effect that the making of a prescribed payment by a pension scheme that is not a registered pension scheme, where the payment would be an authorised payment if the scheme were a registered pension scheme, is not a relevant withdrawal for the purposes of section 576A of ITEPA 2003.

(4)In subsection (3)—

  • authorised payment” means a payment specified in subsection (1), and

  • prescribed” means prescribed in regulations under subsection (3).]

Textual Amendments

F152S. 164(1): s. 164 renumbered as s. 164(1) (21.7.2008) by Finance Act 2008 (c. 9), Sch. 29 para. 1(2)(a)

F153Words in s. 164 inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 6(a)

F154Words in s. 164(a) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 6(b)

F155Words in s. 164(b) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 6(c)

F156S. 164(2) inserted (21.7.2008) by Finance Act 2008 (c. 9), Sch. 29 para. 1(2)(b)

F157Words in s. 164(2)(b) omitted (with effect in accordance with Sch. 5 para. 4 of the amending Act) by virtue of Finance Act 2016 (c. 24), Sch. 5 para. 3(1)(a)

F158S. 164(2)(d) omitted (21.7.2009) by virtue of Finance Act 2009 (c. 10), s. 75(2)(a)

F159S. 164(3)(4) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 85

Modifications etc. (not altering text)

C25S. 164 applied (with modifications) (6.4.2006) by The Pension Protection Fund (Tax) Regulations 2006 (S.I. 2006/575), regs. 1, 8

Commencement Information

I17Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

165Pension rulesU.K.

(1)These are the rules relating to the payment of pensions by a registered pension scheme to a member of the pension scheme (“the pension rules”).

  • Pension rule 1

    No payment of pension may be made before the day on which the member reaches normal minimum pension age, unless the ill-health condition was met immediately before the member became entitled to a pension under the pension scheme.

  • Pension rule 2

    If the member dies before the end of the period of ten years beginning with the day on which the member became entitled to a scheme pension [F160or an annuity], [F161and if in the case of an annuity that day was before 6 April 2015,] payment of the scheme pension [F162or annuity] may continue to be made (to any person) until the end of that period.

    [F163If the member becomes entitled to an annuity on or after 6 April 2015 and the annuity is payable until the later of the member's death and the end of a term certain, payment of the annuity may continue to be made (to any person) until the end of that term.]

    [F164Except as provided by the preceding provisions of this rule, no] payment of the member’s pension may be made after the member’s death.

  • Pension rule 3

    No payment of pension other than a scheme pension may be made in respect of a defined benefits arrangement.

  • Pension rule 4

    [F165No payment of pension] other than—

    (a)

    a scheme pension,

    (b)

    a lifetime annuity, or

    (c)

    [F166drawdown pension]

    may be made in respect of a money purchase arrangement; but a scheme pension may only be paid if the member had an opportunity to select a lifetime annuity instead.

  • [F167Pension rule 5

    The total amount of drawdown pension paid in each drawdown pension year [F168from, or under a short-term annuity purchased using sums or assets out of, the member's drawdown pension fund] in respect of a money purchase arrangement must not exceed [F169150%] of the basis amount for the drawdown pension .]

  • F170. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

  • F170. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2)In this Part “pension”, in relation to a registered pension scheme, includes—

(a)an annuity, and

(b)income withdrawal.

(3)For the purposes of this Part, a person becomes entitled to a pension under a registered pension scheme—

(a)in the case of income withdrawal under the pension scheme, whenever sums or assets held for the purposes of an arrangement under the pension scheme are designated as available for the payment of [F171drawdown pension], and

(b)in any other case, when the person first acquires an actual (rather than a prospective) right to receive the pension

[F172and, for this purpose, the abatement of a scheme pension under a public service pension scheme is not to be taken to affect the right to receive it].

F173(3A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F173(3B). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4)Part 1 of Schedule 28 gives the meaning of expressions used in the pension rules.

Textual Amendments

F160Words in s. 165(1) substituted (with effect as specified in Sch. 19 para. 29(1) to the amending Act) by Finance Act 2007 (c. 11), Sch. 19 para. 2(2)(a)

F161Words in s. 165(1) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 41(a)

F162Words in s. 165(1) substituted (with effect as specified in Sch. 19 para. 29(1) to the amending Act) by Finance Act 2007 (c. 11), Sch. 19 para. 2(2)(b)

F163Words in s. 165(1) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 41(b)

F164Words in s. 165(1) substituted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 41(c)

F165Words in s. 165(1) substituted (with effect in accordance with Sch. 16 para. 85 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 1(2)(a)(i)

F166Words in s. 165(1) substituted (with effect in accordance with Sch. 16 para. 85 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 1(2)(a)(ii)

F167Words in s. 165(1) substituted (with effect in accordance with Sch. 16 para. 85 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 1(2)(b)

F168Words in s. 165(1) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 1

F169Word in s. 165(1) substituted (with effect in accordance with s. 41(6) of the amending Act) by Finance Act 2014 (c. 26), s. 41(1)

F170Words in s. 165(1) omitted (with effect in accordance with Sch. 16 para. 85 of the amending Act) by virtue of Finance Act 2011 (c. 11), Sch. 16 para. 1(2)(c); and omitted (6.4.2015) by virtue of Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 32(1)(a)(4)

F171Words in s. 165(3)(a) substituted (with effect in accordance with Sch. 16 para. 85 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 64

F172Words in s. 165(3) inserted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 7, 64(1)

F173S. 165(3A)(3B) omitted (6.4.2015) by virtue of Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 32(1)(b)(4)

Modifications etc. (not altering text)

C28S. 165 modified (with effect in accordance with Sch. 16 para. 85 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 90(2)(a)

C29S. 165 modified (with effect in accordance with Sch. 16 para. 85 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 91(2)(a)

C30S. 165 modified by The Pensions Schemes (Application of UK Provisions to Relevant Non-UK Schemes) Regulations 2006 (S.I. 2006/207), reg. 6 (as substituted (with effect in accordance with reg. 1(2) of the amending S.I.) by S.I. 2012/1795, regs. 1(1), 3)

Commencement Information

I18Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

166Lump sum ruleU.K.

(1)This is the rule relating to the payment of lump sums by a registered pension scheme to a member of the pension scheme (“the lump sum rule”).

Lump sum rule

No lump sum may be paid other than—

(a)a pension commencement lump sum,

(b)a serious ill-health lump sum,

[F174(ba)an uncrystallised funds pension lump sum,]

(c)a short service refund lump sum,

(d)a refund of excess contributions lump sum,

(e)a trivial commutation lump sum,

(f)a winding-up lump sum, F175...

(g)a lifetime allowance excess lump sum[F176, or

(h)a transitional 2013/14 lump sum.]

(2)For the purposes of this Part, a person becomes entitled to a lump sum under a registered pension scheme—

[F177(za)in the case of a pension commencement lump sum to which paragraph 1B of Schedule 29 applies (certain sums paid before 6 April 2015), immediately before the person becomes entitled to the actual pension (see paragraph 1B(2)(h) of that Schedule),]

(a)in the case [F178of any other] pension commencement lump sum, immediately before the person becomes entitled to the pension in connection with which it is paid [F179(or, if the person dies before becoming entitled to the pension in connection with which it was anticipated it would be paid, immediately before death)],

[F180(aa)in the case of an uncrystallised funds pension lump sum, immediately before it is paid,] and

(b)in any other case, when the person acquires an actual (rather than a prospective) right to receive the lump sum.

(3)Part 1 of Schedule 29 gives the meaning of expressions used in the lump sum rule.

(4)Schedule 36 contains (in Part 3) transitional provisions about lump sums.

[F181(5)The Commissioners for Her Majesty's Revenue and Customs may by regulations amend Part 1 of Schedule 29, or Part 3 of Schedule 36, in connection with cases involving a lump sum within subsection (6).

(6)A lump sum is within this subsection if—

(a)the sum is paid on or after 19 September 2013 and before 6 April 2015, or

(b)the sum is paid before 19 September 2013, a contract for a lifetime annuity is entered into to provide the pension in connection with which the sum is paid, and on or after 19 March 2014 the contract is cancelled.

(7)The provision that may be made under subsection (5) includes provision altering the effect of amendments made by the Finance Act 2014.]

Textual Amendments

F174S. 166(1)(ba) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 54

F175Word in s. 166(1) omitted (19.3.2014) by virtue of Finance Act 2014 (c. 26), Sch. 5 paras. 5(1), 15

F176S. 166(1)(h) and preceding word inserted (19.3.2014) by Finance Act 2014 (c. 26), Sch. 5 paras. 5(1), 15

F177S. 166(2)(za) inserted (19.3.2014) by Finance Act 2014 (c. 26), Sch. 5 paras. 2(2)(a), 15

F178Words in s. 166(2)(a) substituted (19.3.2014) by Finance Act 2014 (c. 26), Sch. 5 paras. 2(2)(b), 15

F179Words in s. 166(2)(a) inserted (retrospective to 6.4.2006) by Finance Act 2007 (c. 11), Sch. 20 paras. 9, 24(3)

F180S. 166(2)(aa) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 55

F181S. 166(5)-(7) inserted (19.3.2014) by Finance Act 2014 (c. 26), Sch. 5 paras. 13, 15

Modifications etc. (not altering text)

C32S. 166 applied (with modifications) (6.4.2006) by The Pension Protection Fund (Tax) Regulations 2006 (S.I. 2006/575), regs. 1, 11

C34S. 166(2) modified by The Taxation of Pension Schemes (Transitional Provisions) Order 2006 (S.I. 2006/572), art. 23B (as inserted (1.6.2009) by S.I. 2009/1172, arts. 1, 3)

C35S. 166(2)(a) modified by S.I. 2006/572, art. 23ZE(2) (as inserted (with effect in accordance with art. 1(2) of the amending S.I.) by The Taxation of Pension Schemes (Transitional Provisions) (Amendment) Order 2011 (S.I. 2011/732), arts. 1(1), 3)

C36S. 166(2)(a) modified by S.I. 2006/572, art. 23ZC(2) (as inserted (with effect in accordance with art. 1(2) of the amending S.I.) by The Taxation of Pension Schemes (Transitional Provisions) (Amendment) Order 2011 (S.I. 2011/732), arts. 1(1), 3)

Commencement Information

I19Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

167Pension death benefit rulesU.K.

(1)These are the rules relating to the payment of pension death benefits by a registered pension scheme in respect of a member of the pension scheme (“the pension death benefit rules”).

  • Pension death benefit rule 1

    No payment of pension death benefit may be made otherwise than to a dependant[F182, or nominee or successor,] of the member.

  • Pension death benefit rule 2

    No payment of pension death benefit other than a dependants' scheme pension may be made in respect of a defined benefits arrangement.

  • Pension death benefit rule 3

    [F183No payment of pension death benefit] other than—

    (a)

    a dependants' scheme pension,

    (b)

    a dependants' annuity, or

    (c)

    [F184dependants’ drawdown pension,]

    may be made to [F185a dependant] in respect of a money purchase arrangement; but a dependants' scheme pension may only be paid if the member or dependant had an opportunity to select a dependants' annuity instead.

  • [F186Pension death benefit rule 3A

    No payment of pension death benefit, other than [F187a nominees' annuity in respect of a money purchase arrangement or] nominees' drawdown pension in respect of a money purchase arrangement, may be made to a nominee of the member.]

  • [F186Pension death benefit rule 3B

    No payment of pension death benefit, other than [F188a successors' annuity in respect of a money purchase arrangement or] successors' drawdown pension in respect of a money purchase arrangement, may be made to a successor of the member.]

  • [F189Pension death benefit rule 4

    The total amount of dependants’ drawdown pension paid to a dependant in each drawdown pension year [F190from, or under a dependants' short-term annuity purchased using sums or assets out of, the dependant's drawdown pension fund] in respect of a money purchase arrangement must not exceed [F191150%] of the basis amount for the drawdown pension year.

    F192...]

  • F193. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

  • F193. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F194(1A)For the purposes of this Part, a person becomes entitled to dependants' income withdrawal, nominees' income withdrawal or successors' income withdrawal under a registered pension scheme whenever sums or assets held for the purposes of an arrangement under the pension scheme are designated as available for the payment of (as the case may be) dependants' drawdown pension, nominees' drawdown pension or successors' drawdown pension.]

(2)[F195In this part “pension] death benefit” means a pension payable on the death of the member (other than a member’s pension payable after the member’s death under pension rule 2: see section 165)[F196, or a pension payable in respect of the member on the subsequent death of a dependant, nominee or successor of the member].

F197(2A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F197(2B). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3)Part 2 of Schedule 28 gives the meaning of expressions used in the pension death benefit rules.

Textual Amendments

F182Words in s. 167 inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 2 para. 2(2)

F183Words in s. 167(1) substituted (with effect in accordance with Sch. 16 para. 85 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 11(2)(a)(i)

F184Words in s. 167(1) substituted (with effect in accordance with Sch. 16 para. 85 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 11(2)(a)(ii)

F185Words in s. 167(1) substituted (with effect in accordance with Sch. 16 para. 85 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 11(2)(a)(iii)

F186Words in s. 167 inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 2 para. 2(3)

F187Words in s. 167(1) inserted (26.3.2015) by Finance Act 2015 (c. 11), Sch. 4 para. 2(2)

F188Words in s. 167(1) inserted (26.3.2015) by Finance Act 2015 (c. 11), Sch. 4 para. 2(3)

F189Words in s. 167(1) substituted (with effect in accordance with Sch. 16 para. 85 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 11(2)(b)

F190Words in s. 167(1) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 6

F191Word in s. 167(1) substituted (with effect in accordance with s. 41(6) of the amending Act) by Finance Act 2014 (c. 26), s. 41(2)

F192Words in s. 167(1) omitted (6.4.2015) by virtue of Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 32(1)(c)(4)

F193Words in s. 167(1) omitted (with effect in accordance with Sch. 16 para. 85 of the amending Act) by virtue of Finance Act 2011 (c. 11), Sch. 16 para. 11(2)(c)

F195Words in s. 167(2) substituted (retrospective to 6.4.2006) by Finance Act 2007 (c. 11), Sch. 20 paras. 22(1), 24(3)

F196Words in s. 167(2) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 2 para. 2(5)

F197S. 167(2A)(2B) omitted (6.4.2015) by virtue of Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 32(1)(d)(4)

Modifications etc. (not altering text)

C39S. 167 modified (with effect in accordance with Sch. 16 para. 85 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 99(2)(a)

C40S. 167 modified (with effect in accordance with Sch. 16 para. 85 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 98(2)(a)

C41S. 167 modified by The Pensions Schemes (Application of UK Provisions to Relevant Non-UK Schemes) Regulations 2006 (S.I. 2006/207), reg. 7 (as substituted (with effect in accordance with reg. 1(2) of the amending S.I.) by S.I. 2012/1795, regs. 1(1), 4)

Commencement Information

I20Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

168Lump sum death benefit ruleU.K.

(1)This is the rule relating to the payment of lump sum death benefits by a registered pension scheme in respect of a member of the pension scheme (“the lump sum death benefit rule”).

Lump sum death benefit rule

No lump sum death benefit may be paid other than—

(a)a defined benefits lump sum death benefit,

(b)a pension protection lump sum death benefit,

(c)an uncrystallised funds lump sum death benefit,

(d)an annuity protection lump sum death benefit,

[F198(e)a drawdown pension fund lump sum death benefit,]

[F199(ea)a flexi-access drawdown fund lump sum death benefit,]

(f)a charity lump sum death benefit,

F200(g). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(h)a trivial commutation lump sum death benefit, or

(i)a winding-up lump sum death benefit.

(2)In this Part “lump sum death benefit” means a lump sum payable on the death of the member [F201, or a lump sum payable in respect of the member on the subsequent death of a dependant, nominee or successor of the member.]

(3)Part 2 of Schedule 29 gives the meaning of expressions used in the lump sum death benefit rule.

(4)Schedule 36 contains (in Part 3) transitional provision about lump sum death benefits.

Textual Amendments

F198S. 168(1)(e) substituted (with effect in accordance with Sch. 16 paras. 85, 103 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 65

F199S. 168(1)(ea) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 7

F200S. 168(1)(g) repealed (19.7.2007) (with effect in accordance with Sch. 19 para. 29(3) of the amending Act) by Finance Act 2007 (c. 11), Sch. 19 para. 5, Sch. 27 Pt. 3(1)

Modifications etc. (not altering text)

C43S. 168 applied (with modifications) (6.4.2006) by The Pension Protection Fund (Tax) Regulations 2006 (S.I. 2006/575), regs. 1, 14

Commencement Information

I21Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

169Recognised transfersU.K.

(1)A “recognised transfer” is a transfer of sums or assets held for the purposes of, or representing accrued rights under, a registered pension scheme so as to become held for the purposes of, or to represent rights under—

(a)another registered pension scheme, or

(b)a qualifying recognised overseas pension scheme,

in connection with a member of that pension scheme.

[F202(1A)A transfer of sums or assets held for the purposes of, or representing accrued rights under, a registered pension scheme to an insurance company is to be treated as a recognised transfer if the sums or assets had been applied by the pension scheme towards the provision of a scheme pension or a dependants' scheme pension (but subject to regulations under subsections (1B) and (1C)).

(1B)The Board of Inland Revenue may by regulations provide that, where any of the sums or assets transferred represent rights in respect of a scheme pension to which a member of a registered pension scheme has become entitled (“the original scheme pension”)—

(a)the transfer is not a recognised transfer unless those sums and assets are, after the transfer, applied towards the provision of a scheme pension (a “new scheme pension”), and

(b)if they are so applied, the new scheme pension is to be treated, to such extent as is prescribed by the regulations and for such of the purposes of this Part as are so prescribed, as if it were the original scheme pension.

(1C)The Board of Inland Revenue may by regulations provide that, where any of the sums or assets transferred represent rights in respect of a dependants' scheme pension to which a dependant of a member of a registered pension scheme has become entitled in respect of the member (“the original dependants' scheme pension”)—

(a)the transfer is not a recognised transfer unless those sums and assets are, after the transfer, applied towards the provision of a dependants' scheme pension (a “new dependants' scheme pension”), and

(b)if they are so applied, the new dependants' scheme pension is to be treated, to such extent as is prescribed by the regulations and for such of the purposes of this Part as are so prescribed, as if it were the original dependants' scheme pension.

(1D)The Board of Inland Revenue may by regulations provide that, where any of the sums or assets transferred represent—

(a)a [F203member's drawdown pension fund or dependant's drawdown pension fund], F204... [F205or

(aa)a member's flexi-access drawdown fund or dependant's flexi-access drawdown fund,] [F206or

(ab)a nominee's flexi-access drawdown fund, or

(ac)a successor's flexi-access drawdown fund,]

F204(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

under an arrangement (“the old arrangement”), the transfer is not a recognised transfer unless all of those sums and assets become held under an arrangement under which no other sums or assets are held (“the new arrangement”).

(1E)If regulations so provide they may make in relation to cases in which the sums and assets become so held provision as to the treatment for the purposes of any provision of this Part of—

(a)the sums and assets transferred, and

(b)the new arrangement,

including provision for treating the sums and assets transferred as remaining, to such extent as is prescribed by the regulations and for such of the purposes of this Part as are so prescribed, sums and assets held under the old arrangement.]

(2)For the purposes of this Part a recognised overseas pension scheme is a qualifying recognised overseas pension scheme if—

(a)the scheme manager has given to the Inland Revenue notification that it is a recognised overseas pension scheme and has provided any such evidence that it is a recognised overseas pension scheme as the Inland Revenue may require,

(b)the scheme manager has undertaken to the Inland Revenue to inform the Inland Revenue if it ceases to be a recognised overseas pension scheme,

[F207(ba)the scheme manager has confirmed to an officer of Revenue and Customs that the scheme manager understands the scheme manager's potential liability to overseas transfer charge and has undertaken to such an officer to operate the charge including by meeting the scheme manager's liabilities to the charge,]

(c)the scheme manager has undertaken to the Inland Revenue to comply with [F208any requirements imposed under subsection (4)], and

(d)the recognised overseas pension scheme is not excluded from being a qualifying recognised overseas pension scheme by subsection (5).

[F209(2A)Regulations may make provision as to—

(a)information that is to be included in, or is to accompany, a notification under subsection (2)(a);

(b)the way and form in which such a notification, or any required information or evidence, is to be given or provided.]

(3)In this Part “scheme manager”, in relation to a pension scheme, means the person or persons administering, or responsible for the management of, the pension scheme.

[F210(4)Regulations may require the scheme manager of a QROPS or former QROPS to—

(a)give the Commissioners information of a prescribed description,

(b)give the Commissioners such evidence as they may require of a prescribed matter,

[F211(ba)give information of a prescribed description to the scheme manager of a QROPS or former QROPS,

(bb)give information of a prescribed description to the scheme administrator of a registered pension scheme,

(bc)give information of a prescribed description to a member, or former member, of the QROPS or former QROPS,] and

(c)give a prescribed authority, in prescribed circumstances, information of a prescribed description.

[F212(4ZA)Regulations may require a member, or former member, of a QROPS or former QROPS to give information of a prescribed description to the scheme manager of a QROPS or former QROPS.]

(4A)Regulations under subsection (4) [F213or (4ZA)] may make provision as to—

(a)the way and form in which information or evidence is to be given, and

(b)the times or intervals at which information or evidence is to be given.

(4B)The regulations may apply any provision of Part 7 of Schedule 36 to FA 2008 (penalties), with or without modifications, in relation to requirements imposed under the regulations on a former QROPS.]

[F214(4C)Provision under subsection (2A)(b) or (4A)(a) may, in particular, provide for use of a way or form specified by the Commissioners.]

(5)A recognised overseas pension scheme is excluded from being a qualifying recognised overseas pension scheme by this subsection if [F215the Commissioners have] decided that—

(a)[F216any of the following conditions is met in relation to the scheme—

(i)there has been a failure to comply with a relevant requirement and the failure is significant,

(ii)any information given pursuant to a relevant requirement is [F217inaccurate] in a material respect,

(iii)any declaration given pursuant to a relevant requirement is false in a material respect,

(iv)there is no scheme manager,] and

(b)by reason of [F218that condition being met] it is not appropriate that transfers of sums or assets held for the purposes of, or representing accrued rights under, registered pension schemes so as to become held for the purposes of, or to represent rights under, the recognised overseas pension scheme should be recognised transfers,

and has notified the person or persons appearing to be the scheme manager of that decision (but subject to subsection (7) and section 170).

[F219(6)A failure to comply with a requirement is significant if—

(a)it is a failure to give information or evidence that is (or may be) of significance, or

(b)there are reasonable grounds for believing that the failure prejudices (or might prejudice) the assessment or collection of tax by the Commissioners.]

(7)The Inland Revenue—

(a)may at any time after a recognised overseas pension scheme becomes excluded from being a qualifying recognised overseas pension scheme decide that the pension scheme is to cease to be so excluded, and

(b)must notify the scheme manager of the decision.

[F220(7A)Regulations may, in a case where—

(a)any of the sums and assets transferred by a relevant overseas transfer represent rights in respect of a pension to which a person has become entitled under the transferring scheme (“the original pension”), and

(b)those sums and assets are, after the transfer, applied towards the provision of a pension under the other scheme (“the new pension”),

provide that the new pension is to be treated, to such extent as is prescribed and for such of the purposes of this Part as are prescribed, as if it were the original pension.

(7B)For the purposes of subsection (7A), a “relevant overseas transfer” is a transfer of sums or assets held for the purposes of, or representing accrued rights under, a relevant overseas scheme (“the transferring scheme”) so as to become held for the purposes of, or to represent rights under—

(a)another relevant overseas scheme, or

(b)a registered pension scheme,

in connection with a member of that pension scheme.

(7C)In subsection (7B) “relevant overseas scheme” means—

(a)a QROPS, or

(b)a relevant non-UK scheme (see paragraph 1(5) of Schedule 34).

(7D)Regulations under subsection (7A) may—

(a)apply generally or only in specified cases, and

(b)make different provision for different cases.]

[F221(8)In subsections (4) to (6) [F222, (7A) to (7D)] and this subsection—

  • the Commissioners” means the Commissioners for Her Majesty's Revenue and Customs;

  • prescribed” means prescribed by regulations;

  • QROPS” means a qualifying recognised overseas pension scheme, and “former QROPS” means a scheme that has at any time been a QROPS;

  • regulations” means regulations made by the Commissioners;

  • relevant requirement” means—

    (a)

    a requirement imposed by regulations under subsection (4), or

    (b)

    a requirement imposed by virtue of Part 1 of Schedule 36 to FA 2008 (powers to obtain information and documents)[F223, or

    (c)

    a requirement to pay overseas transfer charge, or interest on overseas transfer charge, imposed by regulations under section 244L(2) or by an assessment under such regulations.]]

Textual Amendments

F202S. 169(1A)-(1E) inserted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 36, 64(1)

F203Words in s. 169(1D)(a) substituted (with effect in accordance with Sch. 16 para. 85 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 66(a)

F204S. 169(1D)(b) and preceding word omitted (with effect in accordance with Sch. 16 para. 85 of the amending Act) by virtue of Finance Act 2011 (c. 11), Sch. 16 para. 66(b)

F205S. 169(1D)(aa) and preceding word inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 8

F206S. 169(1D)(ab)(ac) and preceding word inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 2 para. 4

F207S. 169(2)(ba) inserted (with effect in accordance with Sch. 4 para. 25 of the amending Act) by Finance Act 2017 (c. 10), Sch. 4 paras. 13(2), 25(3)

F208Words in s. 169(2)(c) substituted (17.7.2013) by Finance Act 2013 (c. 29), s. 53(3)

F209S. 169(2A) inserted (retrospective to 9.3.2017 and with effect in accordance with Sch. 4 para. 25 of the amending Act) by Finance Act 2017 (c. 10), Sch. 4 para. 13(3)

F210S. 169(4)-(4B) substituted for s. 169(4) (17.7.2013) by Finance Act 2013 (c. 29), s. 53(4)

F211S. 169(4)(ba)-(bc) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 92

F212S. 169(4ZA) inserted (retrospective to 9.3.2017 and with effect in accordance with Sch. 4 para. 25 of the amending Act) by Finance Act 2017 (c. 10), Sch. 4 para. 13(4)

F213Words in s. 169(4A) inserted (retrospective to 9.3.2017 and with effect in accordance with Sch. 4 para. 25 of the amending Act) by Finance Act 2017 (c. 10), Sch. 4 para. 13(5)

F214S. 169(4C) inserted (retrospective to 9.3.2017 and with effect in accordance with Sch. 4 para. 25 of the amending Act) by Finance Act 2017 (c. 10), Sch. 4 para. 13(6)

F215Words in s. 169(5) substituted (17.7.2013) by Finance Act 2013 (c. 29), s. 53(5)(a)

F216S. 169(5)(a) substituted (17.7.2013) by Finance Act 2013 (c. 29), s. 53(5)(b)

F217Word in s. 169(5)(a)(ii) substituted (17.7.2014) by Finance Act 2014 (c. 26), Sch. 7 para. 23(a)

F218Words in s. 169(5)(b) substituted (17.7.2013) by Finance Act 2013 (c. 29), s. 53(5)(c)

F219S. 169(6) substituted (17.7.2013) by Finance Act 2013 (c. 29), s. 53(6)

F220S. 169(7A)-(7D) inserted (retrospective to 9.3.2017 and with effect in accordance with Sch. 4 para. 25 of the amending Act) by Finance Act 2017 (c. 10), Sch. 4 para. 13(7)

F221S. 169(8) inserted (17.7.2013) by Finance Act 2013 (c. 29), s. 53(7)

F222Words in s. 169(8) inserted (retrospective to 9.3.2017 and with effect in accordance with Sch. 4 para. 25 of the amending Act) by Finance Act 2017 (c. 10), Sch. 4 para. 13(8)(a)

F223Words in s. 169(8) inserted (retrospective to 9.3.2017 and with effect in accordance with Sch. 4 para. 25 of the amending Act) by Finance Act 2017 (c. 10), Sch. 4 para. 13(8)(b)

Commencement Information

I22Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

170Appeal against decision to exclude recognised overseas pension schemeU.K.

(1)This section applies where a recognised overseas pension scheme is excluded from being a qualifying recognised overseas pension scheme by a decision of the Inland Revenue under section 169(5).

(2)The scheme manager may appeal against the decision.

F224(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F224(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5)An appeal under this section against a decision must be brought within the period of 30 days beginning with the day on which the notification of the decision was given.

(6)[F225On an appeal that is notified to the tribunal, the tribunal] must consider whether the recognised overseas pension scheme ought to have been excluded from being a qualifying recognised overseas pension scheme.

(7)If [F226the tribunal decides] that the recognised overseas pension scheme ought to have been excluded from being a qualifying recognised overseas pension scheme, [F227the tribunal must] dismiss the appeal.

(8)If [F228the tribunal decides] that the recognised overseas pension scheme ought not to have been excluded from being a qualifying recognised overseas pension scheme, the recognised overseas pension scheme is to be treated as having remained a qualifying recognised overseas pension scheme (but subject to any further appeal F229...).

Textual Amendments

Commencement Information

I23Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

171Scheme administration member paymentsU.K.

(1)A “scheme administration member payment” is a payment by a registered pension scheme to or in respect of a [F230person who is or has been a] member of the pension scheme which is made for the purposes of the administration or management of the pension scheme.

(2)But if a payment falling within subsection (1) exceeds the amount which might be expected to be paid to a person who was at arm’s length, the excess is not a scheme administration member payment.

(3)Scheme administration member payments include in particular—

(a)the payment of wages, salaries or fees to persons engaged in administering the pension scheme, and

(b)payments made for the purchase of assets to be held for the purposes of the pension scheme.

(4)A loan to or in respect of a [F231person who is or has been a] member of the pension scheme is not a scheme administration member payment.

(5)Regulations made by the Board of Inland Revenue may provide that payments of a description specified in the regulations are, or are not, scheme administration member payments.

Textual Amendments

F230Words in s. 171(1) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 7

F231Words in s. 171(4) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 7

Commencement Information

I24Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

Unauthorised member paymentsU.K.

172AssignmentU.K.

(1)Subsection (2) applies if a member of a registered pension scheme (or the member’s personal representatives) assigns or agrees to assign

[F232(a)any benefit, other than an excluded pension, to which the member (or any dependant[F233, nominee or successor] of the member) has an actual or prospective entitlement under the pension scheme, or

(b)any right in respect of any sums or assets held for the purposes of any arrangement under the pension scheme].

(2)Unless the assignment or agreement is pursuant to a pension sharing order or provision, the pension scheme is to be treated as making an unauthorised payment to the member (or to the member’s personal representatives in respect of the member).

(3)Subsection (4) applies if a person (or a person’s personal representatives) assigns or agrees to assign

[F234(a)any benefit, other than an excluded pension, to which the person has [F235a] prospective entitlement under the pension scheme in respect of a member of the pension scheme, or

(b)any right in respect of any sums or assets held for the purposes of any arrangement relating to [F236a member of the pension scheme] under the pension scheme].

(4)Unless the assignment or agreement is pursuant to a pension sharing order or provision, the pension scheme is to be treated as making an unauthorised payment to the person (or the person’s personal representatives) in respect of the member.

(5)The amount of the unauthorised payment is the greater of—

(a)the consideration received in respect of the assignment or agreement, and

(b)the consideration which might be expected to be received in respect of the assignment or agreement if the parties to the transaction were at arm’s length [F237 and any power to reduce the entitlement to the benefit or right did not exist].

(6)Where a pension scheme is treated by this section as having made an unauthorised payment in relation to an assignment (or an agreement to assign), payments by the pension scheme of the benefit [F238or right] assigned (or agreed to be assigned) are not unauthorised payments.

[F239(6A)References in this section to a benefit to which the member or a person has an entitlement under the pension scheme includes rights to payments under—

(a)a scheme pension or dependants' scheme pension provided by the scheme administrator or as a result of the application of sums or assets held for the purposes of the pension scheme, or

(b)a lifetime annuity or dependants' annuity[F240, or nominees' annuity or successors' annuity,] purchased by the application of sums or assets held for the purposes of the pension scheme.]

[F241(7)An excluded pension is so much of any pension which under pension rule 2 may continue to be paid after the member's death as may be so paid.]

(8)Assignment” includes assignation and related expressions are to be read accordingly.

Textual Amendments

F232S. 172(1)(a)(b) substituted for words (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 37(2), 64(1)

F233Words in s. 172(1)(a) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 2 para. 5

F234S. 172(3)(a)(b) substituted for words (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 37(3), 64(1)

F235Word in s. 172(3)(a) substituted (21.7.2008) (with effect in accordance with Sch. 28 para. 15(1) of the amending Act) by Finance Act 2008 (c. 9), Sch. 28 para. 2(2)(a)

F236Words in s. 172(3)(b) substituted (21.7.2008) (with effect in accordance with Sch. 28 para. 15(1) of the amending Act) by Finance Act 2008 (c. 9), Sch. 28 para. 2(2)(b)