Finance Act 2000

2000 Chapter 17

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.

[28th July 2000]

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 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:—

Part IExcise duties

Alcoholic liquor duties

1Rate of duty on beer

1

In section 36(1) of the [1979 c. 4.] Alcoholic Liquor Duties Act 1979 (rate of duty on beer), for “£11.50” substitute “£11.89”.

2

This section shall be deemed to have come into force on 1st April 2000.

2Rates of duty on cider

1

In section 62(1A) of the [1979 c. 4.] Alcoholic Liquor Duties Act 1979 (rates of duty on cider)—

a

in paragraph (a) (rate of duty per hectolitre in the case of sparkling cider of a strength exceeding 5.5 per cent.), for “£161.20” substitute “£166.70”;

b

in paragraph (b) (rate of duty per hectolitre in the case of cider of a strength exceeding 7.5 per cent. which is not sparkling cider), for “£37.92” substitute “£39.21”; and

c

in paragraph (c) (rate of duty per hectolitre in any other case), for “£25.27” substitute “£26.13”.

2

This section shall be deemed to have come into force on 1st April 2000.

3Rates of duty on wine and made-wine

1

For Part I of the Table of rates of duty in Schedule 1 to the [1979 c. 4.] Alcoholic Liquor Duties Act 1979 (wine and made-wine) substitute—

Part IWine or made-wine of a strength not exceeding 22 per cent.

Description of wine or made-wine

Rates of duty per hectolitre

£

Wine or made-wine of a strength not exceeding 4 per cent.

47.58

Wine or made-wine of a strength exceeding 4 per cent. but not exceeding 5.5 per cent.

65.42

Wine or made-wine of a strength exceeding 5.5 per cent. but not exceeding 15 per cent. and not being sparkling

154.37

Sparkling wine or sparkling made-wine of a strength exceeding 5.5 per cent. but less than 8.5 per cent.

166.70

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 cent.

220.54

Wine or made-wine of a strength exceeding 15 per cent. but not exceeding 22 per cent.

205.82

2

This section shall be deemed to have come into force on 1st April 2000.

Hydrocarbon oil duties

4Rates of duty and rebate on hydrocarbon oil

1

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

a

in paragraph (a) (light oil), for “£0.5288” substitute “£0.5468”;

b

in paragraph (b) (ultra low sulphur diesel), for “£0.4721” substitute “£0.4882”; and

c

in paragraph (c) (heavy oil which is not ultra low sulphur diesel), for “£0.5021” substitute “£0.5182”.

2

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

a

in paragraph (a) (fuel oil), for “£0.0265” substitute “£0.0274”; and

b

in each of paragraphs (b) and (ba) (gas oil which is not ultra low sulphur diesel and ultra low sulphur diesel), for “£0.0303” substitute “£0.0313”.

3

In section 13A(1A) of that Act (rebate on unleaded petrol)—

a

in paragraph (a) (higher octane unleaded petrol), for “£0.0367” substitute “£0.0379”; and

b

in paragraph (b) (other unleaded petrol), for “£0.0567” substitute “£0.0586”.

4

In section 14(1) of that Act (rebate on light oil for use as furnace fuel), for “£0.0265” substitute “£0.0274”.

5

This section shall be deemed to have come into force at 6 o’clock in the evening of 21st March 2000.

5Ultra low sulphur petrol

1

In section 1 of the [1979 c. 5.] Hydrocarbon Oil Duties Act 1979 (definitions of oil), after subsection (3) insert—

3A

Ultra low sulphur petrol” means unleaded petrol (other than higher octane unleaded petrol)—

a

the sulphur content of which does not exceed 0.005 per cent. by weight or is nil, and

b

the aromatics content of which does not exceed 35 per cent. by volume.

3B

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.

3C

Higher octane unleaded petrol” means unleaded petrol—

a

whose research octane number is not less than 96 and whose motor octane number is not less than 86; or

b

which is delivered for home use as petrol that satisfies the condition in paragraph (a) above; or

c

which is delivered for home use as petrol that is suitable to be used as fuel for engines for which leaded petrol is suitable by virtue of being leaded; or

d

which is delivered for home use under such a description, or in such a manner, as tends, in the circumstances, to suggest that it is—

i

petrol satisfying the condition in paragraph (a) above, or

ii

petrol that is suitable to be used as fuel for engines for which leaded petrol is suitable by virtue of being leaded.

2

In section 2 of that Act (provisions supplementary to section 1), after subsection (1) insert—

1A

Subsection (1) above applies, in particular, to the method of testing unleaded petrol for ascertaining its research octane number or motor octane number.

3

In section 6 of that Act (excise duty on hydrocarbon oil), for subsection (1A) (rates of duty) substitute—

1A

The rates at which the duty shall be charged are—

a

£0.4782 a litre in the case of ultra low sulphur petrol;

b

£0.5468 a litre in the case of light oil other than ultra low sulphur petrol;

c

£0.4882 a litre in the case of ultra low sulphur diesel; and

d

£0.5182 a litre in the case of heavy oil other than ultra low sulphur diesel.

4

In section 13A of that Act (rebate on unleaded petrol)—

a

in subsection (1) after “unleaded petrol” insert “, other than ultra low sulphur petrol,”; and

b

omit subsections (1B), (1C) and (2).

Any directions given under subsection (1C) and in force immediately before the commencement of this section shall have effect as if given under section 2(1) of that Act.

5

In section 27(1) of that Act (interpretation), at the appropriate places insert—

ultra low sulphur petrol” has the meaning given by section 1(3A) above;

“unleaded petrol” and “leaded petrol” have the meaning given by section 1(3B) above.

higher octane unleaded petrol” has the meaning given by section 1(3C) above;

6

This section shall come into force on such day as the Commissioners of Customs and Excise may appoint by order made by statutory instrument.

6Mixing of rebated light oils

1

Schedule 2A to the [1979 c. 5.] Hydrocarbon Oil Duties Act 1979 (mixing of rebated oils) is amended in accordance with Schedule 1 to this Act.

2

The amendments in that Schedule come into force on the day appointed under section 5(6).

7Power to amend definitions of types of hydrocarbon oil

In the [1979 c. 5.] Hydrocarbon Oil Duties Act 1979, after section 2 insert—

2APower to amend definitions

1

The Treasury may by order made by statutory instrument amend the definitions for the purposes of this Act of—

“ultra low sulphur petrol”;

“unleaded petrol” and “leaded petrol”;

“higher octane unleaded petrol”; and

“ultra low sulphur diesel”.

2

An order under this section may contain such incidental, supplementary and transitional provision as appears to the Treasury to be appropriate.

3

No order shall be made under this section unless a draft of it has been laid before and approved by a resolution of the House of Commons.

8Penalties for misuse of rebated heavy oil

1

Section 13 of the [1979 c. 5.] Hydrocarbon Oil Duties Act 1979 (penalties for misuse of rebated heavy oil) is amended as follows.

2

In subsection (1)—

a

for “or, as the case may be, his becoming so liable” substitute “or his becoming so liable (or, where his conduct includes both, each of them)”, and

b

omit the words from “; and the Commissioners” to the end.

3

After subsection (1) insert—

1A

Where oil is used, or is taken into a road vehicle, in contravention of section 12(2) above, the Commissioners may—

a

assess an amount equal to the rebate on like oil at the rate in force at the time of the contravention as being excise duty due from any person who used the oil or was liable for the oil being taken into the road vehicle, and

b

notify him or his representative accordingly.

4

This section shall have effect in relation to liability arising on or after 1st May 2000.

9Use of rebated heavy oil as fuel

1

Schedule 1 to the [1979 c. 5.] Hydrocarbon Oil Duties Act 1979 (which sets out the categories of excepted vehicle which may use rebated heavy oil as fuel) is amended as follows.

2

Omit the following provisions—

a

paragraph 2(1)(b) (which provides that off-road tractors are excepted vehicles) and the word “or” immediately preceding it, and

b

paragraph 2(4) (which defines off-road tractors).

3

This section shall have effect in relation to the use of rebated heavy oil as fuel on or after 1st May 2000.

10Rebates, marking and reliefs

1

The [1979 c. 5.] Hydrocarbon Oil Duties Act 1979 is amended in accordance with subsections (2) to (4).

2

In section 11 (rebate on heavy oil), after subsection (2) insert—

3

This subsection applies in any case where—

a

oil is delivered for home use,

b

regulations under section 24 below require, as a condition of allowing a rebate on the oil under subsection (1) above, that a marker prescribed by regulations under that section shall have been added to the oil, and

c

the marker is present at the time of delivery for home use but in such a proportion that its presence falls to be disregarded by virtue of provision made by regulations under that section.

4

In any case where subsection (3) above applies, a rebate may be allowed on the oil at the time it is delivered for home use if it appears to the Commissioners to be appropriate to allow it.

5

Where a rebate is allowed under subsection (4) above, the rate at which the rebate is allowed—

a

shall be such rate as appears to the Commissioners to be appropriate, but

b

shall not be less than 95 per cent. of, and shall not exceed, the rate of rebate specified in the relevant paragraph of subsection (1) above.

3

In section 20AA(2) (provision in connection with allowing reliefs)—

a

in paragraph (a) (relief may take form of repayment or remission), after “repayment or remission” insert “or an allowance to be set off against duty payable to the Commissioners by the person claiming relief”; and

b

after paragraph (g) insert—

ga

provide for oil on which relief is allowed to be treated for the purposes of this Act as oil on which a rebate has been allowed;

4

In section 24 (regulations controlling use of duty-free and rebated oil), after subsection (4B) insert—

4C

In a case where subsection (4D) below applies, the power of the Commissioners under subsection (4A) above includes power, if it appears to them to be appropriate, to assess (and notify) an amount less than the amount of the rebate concerned.

4D

This subsection applies in any case where—

a

the Commissioners have power to assess (and notify) an amount under subsection (4A) above by virtue of a contravention of, or failure to comply with, a requirement such as is mentioned in paragraph 5 of Schedule 4 to this Act, and

b

the marker whose addition is required by the requirement is present at the time of the contravention or failure but in such a proportion that its presence falls to be disregarded by virtue of provision made by regulations under this section for the purpose mentioned in paragraph 7 of that Schedule.

5

In paragraph 4 of Schedule 5 to the [1994 c. 9.] Finance Act 1994 (decisions under the [1979 c. 5.] Hydrocarbon Oil Duties Act 1979 of which a review may be required), after sub-paragraph (1) insert—

1A

Any decision which is made under or for the purposes of any regulations made under section 20AA of the [1979 c. 5.] Hydrocarbon Oil Duties Act 1979 and is a decision as to whether or not relief is to be allowed.

11Emulsions of water in gas oil

1

In section 6A of the [1979 c. 5.] Hydrocarbon Oil Duties Act 1979 (duty on fuel substitutes), after subsection (2) (definition of chargeable use) insert—

2A

But the use of water is not a chargeable use if—

a

the water is comprised in an emulsion of water in gas oil, and

b

the emulsion is stabilised by additives.

2

This section shall have effect in relation to duty charged on or after the day on which this Act is passed.

Tobacco products duty

12Rates of tobacco products duty

1

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

TABLE

1. Cigarettes

An amount equal to 22 per cent. of the retail price plus £90.43 per thousand cigarettes.

2. Cigars

£132.33 per kilogram.

3. Hand-rolling tobacco

£95.12 per kilogram.

4. Other smoking tobacco and chewing tobacco

£58.17 per kilogram.

2

This section shall be deemed to have come into force at 6 o’clock in the evening of 21st March 2000.

13Basis of calculation of ad valorem element of duty on cigarettes

1

Section 5 of the [1979 c. 7.] Tobacco Products Duty Act 1979 (retail price of cigarettes) is amended as follows.

2

In subsection (1) (meaning of retail price) for the words from “shall be taken to be” to the end substitute

shall be taken to be—

a

the higher of—

i

the recommended price for the sale by retail at that time in the United Kingdom of cigarettes of that description, and

ii

any (or, if more than one, the highest) retail price shown at that time on the packaging of the cigarettes in question,

or

b

if there is no such price recommended or shown, the highest price at which cigarettes of that description are normally sold by retail at that time in the United Kingdom.

3

In subsection (3) (determination of price by Commissioners), for “paragraph (a) of subsection (1)” substitute “paragraph (b) of subsection (1)”.

4

In subsection (4) (reference to arbitration of Commissioners’ determination), for “subsection (1)(a)” substitute “subsection (1)(b)”.

14Fiscal marks on tobacco products

After section 8 of the [1979 c. 7.] Tobacco Products Duty Act 1979 insert the following sections—

8AFiscal marks: introductory

Fiscal marking applies to tobacco products that are—

a

cigarettes, or

b

hand-rolling tobacco.

8BPower to alter range of products to which fiscal marking applies

1

The Commissioners may by order made by statutory instrument amend section 8A above for the purpose of causing fiscal marking—

a

to apply to any description of tobacco products to which it does not apply, or

b

to cease to apply to any description of tobacco products to which it does apply.

2

Where fiscal marking applies to any description of tobacco products, the Commissioners may by regulations provide that fiscal marking does not apply to such products of that description as are of a description specified in the regulations.

3

A statutory instrument containing (whether alone or with other provisions) an order under subsection (1)(a) above shall not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.

4

A statutory instrument that—

a

contains (whether alone or with other provisions) an order under subsection (1) above, and

b

is not subject to any requirement that a draft of the instrument be laid before and approved by a resolution of each House of Parliament,

shall be subject to annulment in pursuance of a resolution of either House of Parliament.

8CFiscal mark regulations

1

The Commissioners may make provision by regulations—

a

requiring the carrying of fiscal marks by tobacco products to which fiscal marking applies, and

b

as to such matters relating to fiscal marks as appear to the Commissioners to be necessary or expedient.

2

In this Act “fiscal mark” means a mark carried by tobacco products indicating all or any of the following—

a

that excise duty has been paid on the products;

b

the rate at which excise duty was paid on the products;

c

the amount of excise duty paid on the products;

d

when excise duty was paid on the products;

e

that sale of the products—

i

is only permissible on dates ascertainable from the mark;

ii

is not permissible after (or on or after) a date so ascertainable;

iii

is not permissible before (or before or on) a date so ascertainable.

3

Regulations under this section may, in particular, make provision about—

a

the contents of a fiscal mark;

b

the appearance of a fiscal mark;

c

in the case of tobacco products that have more than one layer of packaging, which of the layers is (or are) to carry a fiscal mark;

d

the positioning of a fiscal mark on the packaging of any tobacco products;

e

when tobacco products are required to carry a fiscal mark.

4

Regulations under this section may make different provision for different cases.

8DFiscal marks: public notices

1

The Commissioners may by notices published by them regulate any of the matters mentioned in paragraphs (a) to (d) of section 8C(3) above.

2

A notice under this section may provide for provision made by regulations under section 8C above to have effect subject to provisions of the notice.

3

A notice under this section may make different provision for different cases.

8EFailure to comply with fiscal mark regulations and public notices

1

This section applies if a person fails to comply with any requirement imposed by or under—

a

regulations made under section 8C above, or

b

a notice published under section 8D above.

2

Any article in respect of which the person fails to comply with the requirement shall be liable to forfeiture.

3

The person’s failure to comply shall attract a penalty under section 9 of the [1994 c. 9.] Finance Act 1994 (civil penalties).

4

The Commissioners may by regulations make such provision as is mentioned in subsection (5) below about the calculation of the penalty in a case where the failure involves post-dating of any tobacco products.

For this purpose “post-dating” means that the products carry a fiscal mark (“the later period mark”) that—

a

is not one they are required to carry by virtue of this Act, and

b

is one they would be required to carry by virtue of this Act if the requirement to pay the duty charged on them under section 2 above took effect at a time later than that at which it in fact takes effect.

5

The provision that may be made by regulations under subsection (4) above is for the penalty to be calculated by reference to the duty currently charged on the products.

For this purpose “the duty currently charged” on the products is the amount of the duty charged under section 2 above that would be payable on the products if the requirement to pay the duty took effect at the time of the failure.

8FSale of marked tobacco when not permitted: penalties

1

This section applies if provision made by or under—

a

regulations made under section 8C above, or

b

a notice published under section 8D above,

provides for any tobacco products to carry a period of sale mark.

2

In this section—

a period of sale mark” means a fiscal mark indicating any of the matters mentioned in subsection (2)(e) of section 8C above; and

prohibited time”, in relation to tobacco products that carry a period of sale mark, means a time when, according to the mark, sale of the products is not permissible.

3

If—

a

a person sells by way of retail sale, or exposes for retail sale, any tobacco products that carry a period of sale mark, and

b

he so sells or exposes the products at a prohibited time,

his so selling or exposing the products shall attract a penalty under section 9 of the [1994 c. 9.] Finance Act 1994 (civil penalties) and the products are liable to forfeiture.

8GOffences: possession and sale etc. of unmarked tobacco

1

In this section “unmarked products” means tobacco products that are subject to fiscal marking but do not carry a compliant duty-paid fiscal mark.

2

For the purposes of this section “duty-paid fiscal mark” means a fiscal mark carried by tobacco products indicating that excise duty has been paid on the products.

3

For the purposes of this section a duty-paid fiscal mark carried by tobacco products of any description is “compliant” if it complies with all relevant requirements for any duty-paid fiscal mark that by virtue of this Act is required to be carried by such tobacco products of that description as are by virtue of this Act required to carry such a mark.

For this purpose “relevant requirement” means a requirement, imposed by virtue of this Act, as to any of the matters mentioned in paragraphs (a) to (d) of section 8C(3) above (contents, appearance and positioning etc. of fiscal marks).

4

If a person—

a

is in possession of, transports or displays, or

b

sells, offers for sale or otherwise deals in,

unmarked products then, except in such cases as may be prescribed in regulations made by the Commissioners, that person commits an offence and the products are liable to forfeiture.

5

It is a defence for a person charged with an offence under subsection (4) above to prove that the unmarked products were not required by virtue of this Act to carry a duty paid fiscal mark.

6

A person guilty of an offence under subsection (4) above shall be liable on summary conviction to a fine not exceeding level 5 on the standard scale.

8HOffences: use of premises for sale of unmarked tobacco

1

A manager of premises commits an offence if he suffers the premises to be used for the sale of unmarked products.

In this section “unmarked products” has the same meaning as in section 8G above.

2

It is a defence for a person charged with an offence under subsection (1) above to prove that the unmarked products were not required by virtue of this Act to carry a duty-paid fiscal mark.

For this purpose “duty-paid fiscal mark” has the same meaning as in section 8G above.

3

A person guilty of an offence under subsection (1) above shall be liable on summary conviction to a fine not exceeding level 5 on the standard scale.

4

A court by or before which a person is convicted of an offence under subsection (1) above may make an order prohibiting the use of the premises in question for the sale of tobacco products during a period specified in the order.

5

The period specified in an order under subsection (4) above shall not exceed six months; and the first day of the period shall be the day specified as such in the order.

6

A manager of premises commits an offence if he suffers the premises to be used in breach of an order under subsection (4) above.

7

A person guilty of an offence under subsection (6) above shall be liable on summary conviction to a fine not exceeding level 5 on the standard scale.

8

For the purposes of this section a person is a manager of premises if he—

a

is entitled to control their use,

b

is entrusted with their management, or

c

is in charge of them.

8JInterfering with fiscal marks: penalties

1

This section applies where a person—

a

alters or overprints any fiscal mark carried by any tobacco products in compliance with any provision made under this Act, or

b

causes any such mark to be altered or overprinted.

2

His altering or overprinting of the mark, or his causing it to be altered or overprinted, shall attract a penalty under section 9 of the [1994 c. 9.] Finance Act 1994 (civil penalties).

3

The products that carried the mark shall be liable to forfeiture.

4

The penalty under subsection (2) above shall be calculated by reference to the duty currently charged on the products.

For this purpose “the duty currently charged” on the products is the amount of the duty charged under section 2 above that would be payable on the products if the requirement to pay the duty took effect at the time of the conduct attracting the penalty.

15Management of excise duty on tobacco products

1

The [1979 c. 7.] Tobacco Products Duty Act 1979 has effect subject to the following amendments.

2

In section 2(2) (remission or repayment of duty where tobacco products exported, shipped as stores or used for research or experiment), for the words from “that” to the end of paragraph (b) substitute—

that—

a

the products in question have been—

i

exported or shipped as stores, or

ii

used solely for the purposes of research or experiment; and

b

any fiscal marks carried by the products have been obliterated;

3

Section 7 (regulations for management of duty) is amended as follows.

4

After paragraph (a) of subsection (1) (method of charging duty and securing and collecting duty) insert—

aa

for charging the duty, in such circumstances as may be specified in the regulations, by reference to the weight of the tobacco products at a time specified in the regulations or by the Commissioners (whether the time at which the products become chargeable or that at which the duty becomes payable or any other time);

5

In paragraph (b) of subsection (1) (registration of premises for storage of tobacco), after “regulating their” insert “storage and”.

6

After that paragraph insert—

ba

for the registration of premises for the manufacture of tobacco products, for restricting or prohibiting the manufacture of tobacco products otherwise than in premises so registered and for regulating their storage and treatment in, and removal from, such premises;

7

In paragraph (c) of subsection (1), omit sub-paragraph (i) (which is superseded by the amendment made by subsection (6) above).

8

In paragraph (d) of subsection (1), for “and the making of such returns, as may be specified in the regulations” substitute “the notification of such information, and the making of such returns, as may be specified in the regulations or required by the Commissioners”.

9

After subsection (1) insert—

1A

Regulations under subsection (1) above may, in particular, include provision—

a

imposing, or providing for the imposition under the regulations of, conditions and restrictions relating to any of the matters mentioned in that subsection;

b

enabling the Commissioners to dispense with compliance with any provision contained in the regulations in such circumstances and subject to such conditions (if any) as they may determine.

Gaming duty

16Rates of gaming duty

1

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

TABLE

Part of gross gaming yield

Rate

The first £470,500

2½ per cent.

The next £1,045,500

12½ per cent.

The next £1,045,500

20 per cent.

The next £1,830,000

30 per cent.

The remainder

40 per cent.

2

This section has effect in relation to accounting periods beginning on or after 1st April 2000.

Amusement machine licence duty

17Amusement machine licence duty

Schedule 2 to this Act (which amends the [1981 c. 63.] Betting and Gaming Duties Act 1981) shall have effect.

Air passenger duty

18Rates of duty

1

Section 30 of the [1994 c. 9.] Finance Act 1994 is amended as follows.

2

In subsection (1) (basis on which duty is charged) for the words from “appropriate” to the end substitute

determined in accordance with subsections (2) to (4) below.

3

In subsection (2) (rate where destination is in an EEA State etc)—

a

for “The rate is £10 if that place” substitute “If the place where the passenger’s journey ends”, and

b

after paragraph (b) add—

the rate shall be determined in accordance with subsection (3A) below.

4

After subsection (3) insert—

3A

In a case falling within subsection (2) above—

a

if the passenger’s agreement for carriage provides for standard class travel in relation to every flight on his journey, the rate is £5;

b

in any other case, the rate is £10.

5

For subsection (4) (rate where destination is not in an EEA State etc) substitute—

4

In a case not falling within subsection (2) above—

a

if the passenger’s agreement for carriage provides for standard class travel in relation to every flight on his journey, the rate is £20;

b

in any other case, the rate is £40.

6

At the end of the section add—

10

In this section “standard class travel”, in relation to carriage on an aircraft, means—

a

in the case of an aircraft on which only one class of travel is available, that class of travel;

b

in any other case, the lowest class of travel available on the aircraft.

7

In consequence of the provision made by the preceding provisions of this section, in section 39 of the [1994 c. 9.] Finance Act 1994 (schemes for simplifying operation of reliefs)—

a

in subsection (4)(b), for “at the rate mentioned in section 30(2) above” substitute—

i

at the rate mentioned in paragraph (a) of section 30(3A) above, and

ii

at the rate mentioned in paragraph (b) of that provision

b

in subsection (4B)(c), for “at the rate mentioned in section 30(2) above” substitute—

i

at the rate mentioned in paragraph (a) of section 30(3A) above, and

ii

at the rate mentioned in paragraph (b) of that provision

c

in subsection (8)(b), for the words from “on the carriage” to the end substitute—

i

on the carriage of each of those falling within paragraph (a) of section 30(4) above at the rate mentioned in that paragraph, and

ii

on the carriage of each of those falling within paragraph (b) of section 30(4) above at the rate mentioned in that paragraph

d

in subsection (8A)(c), for the words from “on the carriage” to the end substitute—

i

on the carriage of each of those falling within paragraph (a) of section 30(4) above at the rate mentioned in that paragraph, and

ii

on the carriage of each of those falling within paragraph (b) of section 30(4) above at the rate mentioned in that paragraph

8

This section applies to any carriage of a passenger on an aircraft which begins on or after 1st April 2001.

19Changes in exemption from duty

1

Section 31 of the [1994 c. 9.] Finance Act 1994 is amended as follows.

2

Omit subsections (1) and (2) (exemption in relation to passengers making return journeys within the United Kingdom).

3

After subsection (4A) insert—

4B

A passenger is not a chargeable passenger in relation to a flight if under his agreement for carriage (whether or not it is evidenced by a ticket) the flight is to depart from an airport which is in a region of the United Kingdom designated by order.

4C

An order may be made for the purposes of subsection (4B) above in respect of any region which has a population density of not more than 12.5 persons per square kilometre.

4D

In subsections (4B) and (4C) above, references to a region are references to an area which is determined by the Treasury to constitute a region for the purposes of those subsections.

4

Omit subsection (6) (provision by regulations for subsection (1) to have effect in relation to journeys begun in the Isle of Man).

5

In consequence of the provision made by subsection (2) above, in section 43 of the [1994 c. 9.] Finance Act 1994 (interpretation)—

a

in subsection (2) (meaning of “journey” etc), omit “Subject to subsection (3) below”, and

b

omit subsection (3) (interpretation of references to a return ticket).

6

This section applies to any carriage of a passenger on an aircraft which begins on or after 1st April 2001.

Vehicle excise duty

20Threshold for reduced general rate

1

In paragraph 1 of Schedule 1 to the [1994 c. 22.] Vehicle Excise and Registration Act 1994 (rate of duty applicable where no other rate specified), in sub-paragraphs (2) and (2A) for “1,100 cubic centimetres” (the reduced rate threshold) substitute “1,200 cubic centimetres”.

This amendment applies to licences issued on or after 1st March 2001.

2

Refunds shall be made by the Secretary of State, in accordance with the following provisions of this section, in respect of licences—

a

issued in the period beginning with 1st March 2000 and ending with 28th February 2001, and

b

not surrendered before the end of that period,

where the amount of vehicle excise duty chargeable on the licence would have been less if the amendment in subsection (1) had applied.

3

The amount of the refund is—

a

£55 for a 12 month licence, and

b

£27.50 for a 6 month licence.

4

The person entitled to the refund is—

a

in the case of a licence in force on 28th February 2001, the keeper of the vehicle on that date;

b

in the case of a licence that has ceased to be in force before that date, the keeper of the vehicle when the licence expired.

5

For the purposes of subsection (4) the keeper of the vehicle shall be taken to be—

a

the person registered as keeper of the vehicle on the date in question, or

b

if the Secretary of State has received notification of a change of ownership of the vehicle as a result of which another person is on that date entitled to be registered as the new keeper of the vehicle, that person.

6

A refund shall only be made if an application is made for it in such form, and containing such particulars and supported by such documents, as the Secretary of State may require.

7

The Secretary of State shall give notice in writing to any person appearing to him to be entitled to a refund—

a

informing him that he appears to be entitled to a refund,

b

enclosing an application form, and

c

specifying the particulars and supporting documents to be provided.

8

An application for, or the making of, a refund under this section in respect of a licence does not affect the validity of the licence.

9

For the purposes of section 19 of the [1994 c. 22.] Vehicle Excise and Registration Act 1994 (surrender of licences) as it applies to the surrender on or after 1st March 2001 of a licence in respect of which a refund under this section has been made, or applied for, the annual rate of duty chargeable on the licence shall be taken to be that which would have been chargeable if the amendment in subsection (1) above had applied.

10

Section 45 of that Act (offence of false or misleading declaration) applies to a declaration in connection with an application for a refund under this section as it applies to a declaration in connection with an application for a vehicle licence.

11

In the application of this section to Northern Ireland, references to registration as the keeper of a vehicle shall be read as references to registration as the owner of the vehicle.

21Increase in general rate

1

In paragraph 1 of Schedule 1 to the [1994 c. 22.] Vehicle Excise and Registration Act 1994 (rate of duty applicable where no other rate specified)—

a

in sub-paragraph (2) (the standard rate), for “£155” substitute “£160”; and

b

in sub-paragraph (2A) (the reduced rate), for “£100” substitute “£105”.

2

This section applies to licences issued on or after 1st March 2001.

22Rates of duty for new cars and vans

Schedule 3 to this Act has effect with respect to vehicle excise duty on light passenger vehicles and light goods vehicles first registered on or after 1st March 2001.

23Enforcement provisions for graduated rates

Schedule 4 to this Act has effect with respect to vehicle licences for vehicles in respect of which vehicle excise duty is chargeable at different rates.

24Rates of duty for goods vehicles

1

Schedule 5 to this Act (which makes provision for new rates of vehicle excise duty for goods vehicles etc.) has effect.

2

The provisions of that Schedule apply in relation to licences issued after 21st March 2000.

Enforcement of duties

25Power to search premises

In Part XII of the [1979 c. 2.] Customs and Excise Management Act 1979 (general supplementary provisions), for section 161 (power to search premises) substitute—

161Power to search premises: writ of assistance

1

The powers conferred by this section are exercisable by an officer having a writ of assistance if there are reasonable grounds to suspect that anything liable to forfeiture under the customs and excise Acts—

a

is kept or concealed in any building or place, and

b

is likely to be removed, destroyed or lost before a search warrant can be obtained and executed.

2

The powers are—

a

to enter the building or place at any time, whether by day or night, on any day, and search for, seize, and detain or remove any such thing, and

b

so far as is necessary for the purpose of such entry, search, seizure, detention or removal, to break open any door, window or container and force and remove any other impediment or obstruction.

3

An officer shall not exercise the power of entry conferred by this section by night unless accompanied by a constable.

4

A writ of assistance shall continue in force during the reign in which it is issued and for six months thereafter.

161APower to search premises: search warrant

1

If a justice of the peace is satisfied by information upon oath given by an officer that there are reasonable grounds to suspect that anything liable to forfeiture under the customs and excise Acts is kept or concealed in any building or place, he may by warrant under his hand authorise any officer, and any person accompanying an officer, to enter and search the building or place named in the warrant.

2

An officer or other person so authorised has power—

a

to enter the building or place at any time, whether by day or night, on any day, and search for, seize, and detain or remove any such thing, and

b

so far as is necessary for the purpose of such entry, search, seizure, detention or removal, to break open any door, window or container and force and remove any other impediment or obstruction.

3

Where there are reasonable grounds to suspect that any still, vessel, utensil, spirits or materials for the manufacture of spirits is or are unlawfully kept or deposited in any building or place, subsections (1) and (2) above apply in relation to any constable as they would apply in relation to an officer.

4

The powers conferred by a warrant under this section are exercisable until the end of the period of one month beginning with the day on which the warrant is issued.

5

A person other than a constable shall not exercise the power of entry conferred by this section by night unless accompanied by a constable.

26Power to search articles

In Part XII of the [1979 c. 2.] Customs and Excise Management Act 1979 (general supplementary provisions), after section 163 (power to search vehicles or vessels) insert—

163APower to search articles

1

Without prejudice to any other power conferred by the Customs and Excise Acts 1979, where there are reasonable grounds to suspect that a person in the United Kingdom (referred to in this section as “the suspect”) has with him, or at the place where he is, any goods to which this section applies, an officer may—

a

require the suspect to permit a search of any article that he has with him or at that place, and

b

if the suspect is not under arrest, detain him (and any such article) for so long as may be necessary to carry out the search.

2

The goods to which this section applies are dutiable alcoholic liquor, or tobacco products, which are—

a

chargeable with any duty of excise, and

b

liable to forfeiture under the customs and excise Acts.

3

Notwithstanding anything in subsection (4) of section 24 of the [1995 c. 39.] Criminal Law (Consolidation) (Scotland) Act 1995 (detention and questioning by customs officers), detention of the suspect under subsection (1) above shall not prevent his subsequent detention under subsection (1) of that section.

27Security for customs and excise duties

1

Section 157 of the [1979 c. 2.] Customs and Excise Management Act 1979 (bonds and security) is amended as follows.

2

In subsection (1) (power to require security), for “by bond” substitute “(or further security) by bond, guarantee”.

3

After that subsection insert—

1A

For the purposes of this section “condition in connection with excise” includes a condition in connection with excise duty charged, under the law of a member State other than the United Kingdom, on—

a

manufactured tobacco,

b

alcohol or alcoholic beverages, or

c

mineral oils.

The expressions used in paragraphs (a) to (c) above have the same meaning as in Council Directive 92/12/EEC.

4

In subsection (2) (bonds for the purposes of assigned matters), after “Any bond” insert “, guarantee or other security”.

5

In paragraph (a) of that subsection (bonds to be taken on behalf of Her Majesty), for “on behalf of Her Majesty” substitute “either on behalf of Her Majesty or on behalf of Her Majesty and the tax authorities of each member State other than the United Kingdom”.

6

At the end of that subsection add—

In this subsection “assigned matter” includes any excise duty charged as mentioned in subsection (1A) above.

28Civil penalties for breach of excise duty requirements

In section 9(2)(a) of the [1994 c. 9.] Finance Act 1994 (how to calculate the penalty in cases where provision is made by any enactment for conduct to attract a penalty calculated by reference to an amount of excise duty), for “or any other enactment” substitute “, or by or under any other enactment,”.

29Correction of reference

In section 127 of the [1999 c. 16.] Finance Act 1999 (interest on repayments of customs duty), in subsection (1)(b) for “Council Regulation 2454/93” substitute “Commission Regulation 2454/93”.

This amendment shall be deemed always to have had effect.

Part IIClimate change levy

30Climate change levy

1

Schedule 6 to this Act (which makes provision for a new tax that is to be known as climate change levy) shall have effect.

2

Schedule 7 to this Act (climate change levy: consequential amendments) shall have effect.

3

Part V of Schedule 6 to this Act (registration for the purposes of climate change levy) shall not come into force until such date as the Treasury may appoint by order made by statutory instrument; and different days may be appointed under this subsection for different purposes.

Part IIIIncome Tax, Corporation Tax and Capital Gains Tax

Chapter ICharge and rates

Income tax

31Charge and rates for 2000-01

Income tax shall be charged for the year 2000-01, and for that year—

a

the starting rate shall be 10%,

b

the basic rate shall be 22%, and

c

the higher rate shall be 40%.

32Extension of starting rate to savings income of individuals

1

Section 1A of the Taxes Act 1988 (application of lower rate or Schedule F ordinary rate to income from savings and distributions) is amended as follows.

2

In subsection (1)(b) (income of individuals to which those rates do not apply), after the words “is not” insert

i

savings income falling within section 1(2)(aa), or

ii

3

After subsection (1) insert—

1AA

In subsection (1)(b)(i) above “savings income” means income to which this section applies other than—

a

income chargeable under Schedule F, or

b

equivalent foreign income falling within subsection (3)(b) below and chargeable under Case V of Schedule D.

4

This section has effect for the year 2000-01 and subsequent years and shall be deemed to have had effect for the year 1999-00.

33Deduction of income tax from foreign dividends

1

In section 4 of the Taxes Act 1988 (construction of references in Income Tax Acts to deduction of tax), after subsection (1A) (which provides for deduction at lower rate from savings and distributions) insert—

1B

To the extent that section 118E (paying and collecting agents: deduction of tax) applies in relation to foreign dividend income—

a

subsections (1) and (1A) above shall not apply, and

b

any provision of that section of the kind mentioned in subsection (1) above shall be construed as referring to deduction or payment of income tax at the Schedule F ordinary rate in force for the relevant year of assessment.

For this purpose “foreign dividend income” means any such dividend or other distribution of a company not resident in the United Kingdom as would be chargeable under Schedule F if the company were resident in the United Kingdom.

2

This section has effect for the year 2000-01 and shall be deemed to have had effect for the year 1999-00.

34Children’s tax credit

1

In section 257AA(2) of the Taxes Act 1988 (which specifies the amount by reference to which the children’s tax credit is calculated) for “£4,160” substitute “£4,420”.

2

This section has effect for the year 2001-02 and subsequent years of assessment.

Corporation tax

35Charge and main rate for financial year 2001

Corporation tax shall be charged for the financial year 2001 at the rate of 30%.

36Small companies’ rate for financial year 2000

For the financial year 2000—

a

the small companies’ rate shall be 20%, and

b

the fraction mentioned in section 13(2) of the Taxes Act 1988 (marginal relief for small companies) shall be one fortieth.

Capital gains tax

37Application of starting rate to capital gains tax

1

In section 4 of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (rates of capital gains tax), after subsection (1AA) insert—

1AB

If (after allowing for any deductions in accordance with the Income Tax Acts) an individual has no income for a year of assessment or his total income for the year is less than the starting rate limit, then—

a

if the amount on which he is chargeable to capital gains tax does not exceed the unused part of his starting rate band, the rate of capital gains tax in respect of gains accruing to him in the year shall be equivalent to the starting rate;

b

if the amount on which he is chargeable to capital gains tax exceeds the unused part of his starting rate band, the rate of capital gains tax in respect of such gains accruing to him in the year as correspond to the unused part shall be equivalent to the starting rate.

1AC

The references in subsection (1AB) above to the unused part of an individual’s starting rate band are to the amount by which the starting rate limit exceeds his total income (as reduced by any deductions made in accordance with the Income Tax Acts).

2

This section has effect for the year 2000-01 and subsequent years of assessment.

Chapter IIOther provisions

Giving to charity

38Payroll deduction scheme

1

Where in accordance with a scheme approved under section 202 of the Taxes Act 1988 (donations to charity: payroll deduction scheme) an agent is to pay to a charity any sum which—

a

is withheld by an employer from a payment which an employee is entitled to receive; and

b

is paid by the employer to the agent,

the agent shall, within a period prescribed by regulations made by the Treasury, pay a supplement equal to 10% of that sum to the charity.

2

On a claim made by an agent in such form as the Board may prescribe, the Board shall pay to the agent out of money provided by Parliament—

a

such amounts as are required—

i

to fund the payment of supplements falling to be paid by him; or

ii

to reimburse him for supplements paid by him the payment of which has not been so funded; and

b

in the case of an agent which is a charity, an amount which is equal to 10% of the aggregate of sums which—

i

are withheld and paid as mentioned in paragraphs (a) and (b) of subsection (1) above; and

ii

are sums to which the agent is itself entitled in its capacity as a charity.

3

The Treasury may by regulations make provision—

a

requiring agents to notify the Board of any failures of theirs to comply with subsection (1) above, and of the reasons for those failures;

b

requiring agents to keep records of supplements paid by them under that subsection; and

c

for the assessment and recovery under the Taxes Acts of amounts paid to agents under subsection (2) above which ought not to have been so paid.

The regulations may contain such supplementary and incidental provision as appears to the Treasury necessary or expedient.

4

In this section—

agent” means any such person or charity as is mentioned in subsection (4) of section 202 of the Taxes Act 1988;

employee” and “employer” shall be construed in accordance with subsection (1) of that section;

charity” has the same meaning as in section 506 of that Act and includes each of the bodies mentioned in section 507 of that Act;

the Taxes Acts” has the same meaning as in the [1970 c. 9.] Taxes Management Act 1970.

5

In section 202 of the Taxes Act 1988—

a

in subsection (6), the words “must not be paid by the employee under a covenant” shall cease to have effect;

b

subsection (7) shall cease to have effect; and

c

in subsection (11), in the definition of “charity”, after “section 506” there shall be inserted “and includes each of the bodies mentioned in section 507”.

6

Subsections (1) to (4) above shall have effect in relation to supplements or other amounts payable in respect of sums withheld on or after 6th April 2000 and before 6th April 2003; and no claim under subsection (2) above shall be entertained if made on or after 6th April 2004.

7

Subsection (5) above shall have effect in relation to sums withheld on or after 6th April 2000.

39Gift aid payments by individuals

1

Section 25 of the [1990 c. 29.] Finance Act 1990 (donations to charity by individuals) shall be amended in accordance with subsections (2) to (7) below.

2

In subsection (1)(c), for “an appropriate certificate” there shall be substituted “an appropriate declaration”.

3

In subsection (2)—

a

paragraphs (c) and (g) shall cease to have effect;

b

in paragraph (e), for “two and a half per cent of the amount of the gift” there shall be substituted “the limit imposed by subsection (5A) below”; and

c

for paragraph (i) there shall be substituted—

i

either—

i

at the time the gift is made, the donor is resident in the United Kingdom or performs duties which by virtue of section 132(4)(a) of the Taxes Act 1988 (Crown employees serving overseas) are treated as being performed in the United Kingdom; or

ii

the grossed up amount of the gift would, if in fact made, be payable out of profits or gains brought into charge to income tax or capital gains tax.

4

For subsection (3) there shall be substituted—

3

The reference in subsection (1)(c) above to an appropriate declaration is a reference to a declaration which—

a

is given in such manner as may be prescribed by regulations made by the Board; and

b

contains such information and such statements as may be so prescribed.

3A

Regulations made for the purposes of subsection (3) above may—

a

provide for declarations to have effect, to cease to have effect or to be deemed never to have had effect in such circumstances and for such purposes as may be prescribed by the regulations;

b

require charities to keep records with respect to declarations given to them by donors; and

c

make different provision for declarations made in a different manner.

5

After subsection (5) there shall be inserted—

5A

The limit imposed by this subsection is—

a

where the amount of the gift does not exceed £100, 25 per cent of the amount of the gift;

b

where the amount of the gift exceeds £100 but does not exceed £1,000, £25;

c

where the amount of the gift exceeds £1,000, 2.5 per cent of the amount of the gift.

5B

Where a benefit received in consequence of making a gift—

a

consists of the right to receive benefits at intervals over a period of less than twelve months;

b

relates to a period of less than twelve months; or

c

is one of a series of benefits received at intervals in consequence of making a series of gifts at intervals of less than twelve months,

the value of the benefit shall be adjusted for the purposes of subsection (4) above and the amount of the gift shall be adjusted for the purposes of subsection (5A) above.

5C

Where a benefit, other than a benefit which is one of a series of benefits received at intervals, is received in consequence of making a gift which is one of a series of gifts made at intervals of less than twelve months, the amount of the gift shall be adjusted for the purposes of subsection (5A) above.

5D

Where the value of a benefit, or the amount of a gift, falls to be adjusted under subsection (5B) or (5C) above, the value or amount shall be multiplied by 365 and the result shall be divided by—

a

in a case falling within subsection (5B)(a) or (b) above, the number of days in the period of less than twelve months;

b

in a case falling within subsection (5B)(c) or (5C) above, the average number of days in the intervals of less than twelve months;

and the reference in subsection (5B) above to subsection (4) above is a reference to that subsection as it applies for the purposes of subsection (2)(e) above.

5E

In determining whether a gift to a charity falling within subsection (5F) below is a qualifying donation, there shall be disregarded the benefit of any right of admission received in consequence of the making of the gift—

a

to view property the preservation of which is the sole or main purpose of the charity; or

b

to observe wildlife the conservation of which is the sole or main purpose of the charity;

but this subsection shall not apply unless the opportunity to make gifts which attract such a right is available to members of the public.

5F

A charity falls within this subsection if its sole or main purpose is the preservation of property, or the conservation of wildlife, for the public benefit.

5G

In subsection (5E) above “right of admission” refers to admission of the person making the gift (or any member of his family who may be admitted because of the gift) either free of the charges normally payable for admission by members of the public, or on payment of a reduced charge.

6

For subsections (6) to (9) there shall be substituted—

6

Where any gift made by the donor in a year of assessment is a qualifying donation, then, for that year—

a

the Income Tax Acts and the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 shall have effect, in their application to him, as if—

i

the gift had been made after deduction of income tax at the basic rate; and

ii

the basic rate limit were increased by an amount equal to the grossed up amount of the gift;

b

the provisions mentioned in subsection (7) below shall have effect, in their application to him, as if any reference to income tax which he is entitled to charge against any person included a reference to the tax treated as deducted from the gift; and

c

to the extent, if any, necessary to ensure that he is charged to an amount of income tax and capital gains tax equal to the tax treated as deducted from the gift, he shall not be entitled to relief under Chapter I of Part VII of the Taxes Act 1988;

but paragraph (a)(ii) above shall not apply for the purposes of any computation under section 550(2)(a) or (b) of that Act (relief where gain charged at a higher rate).

7

The provisions referred to in subsection (6)(b) above are—

a

section 289A(5)(e) of the Taxes Act 1988 (relief under enterprise investment scheme);

b

section 796(3) of that Act (credit for foreign tax); and

c

paragraph 1(6)(f) of Schedule 15B to that Act (venture capital trusts).

8

Where the tax treated as deducted from a gift by virtue of subsection (6) above exceeds the amount of income tax and capital gains tax with which the donor is charged for the year of assessment, the donor shall be assessable and chargeable with income tax at the basic rate on so much of the gift as is necessary to recover an amount of tax equal to the excess.

9

In determining for the purposes of subsection (8) above the total amount of income tax and capital gains tax with which the donor is charged for the year of assessment, there shall be disregarded—

a

any tax charged at the basic rate by virtue of—

i

section 348 of the Taxes Act 1988 (read with section 3 of that Act); or

ii

section 349 of that Act (read with section 350 of that Act);

b

any tax treated as having been paid under—

i

section 233(1)(a) of that Act (taxation of certain recipients of distributions);

ii

section 249(4)(a) of that Act (stock dividends treated as income); or

iii

section 547(5)(a) of that Act (method of charging life policy gain to tax);

c

any relief to which section 256(2) of that Act applies (relief by way of income tax reduction);

d

any relief under—

i

section 347B of that Act (relief for maintenance payments);

ii

section 788 of that Act (relief by agreement with other countries); or

iii

section 790(1) of that Act (unilateral relief);

e

any set off of tax deducted, or treated as deducted, from income other than—

i

tax treated as deducted from income by virtue of section 421(1)(a) of that Act (taxation of borrower when loan released etc); or

ii

tax treated as deducted from a relevant amount within the meaning of section 699A of that Act (untaxed sums comprised in the income of an estate) except to the extent that the relevant amount is or would be paid in respect of a distribution chargeable under Schedule F; and

f

any set off of tax credits.

9A

For the purposes of sections 257(5) and 257A(5) of the Taxes Act 1988 (age related allowances), the donor’s total income shall be treated as reduced by the aggregate amount of gifts from which tax is treated as deducted by virtue of subsection (6) above.

7

In subsection (12), paragraphs (b) and (e) and the word “and” immediately preceding paragraph (e) shall cease to have effect.

8

In subsections (1)(b) and (3)(b) of section 257BB of the Taxes Act 1988 (transfer of relief under section 257A where relief exceeds income), after “section 256(2)(b)” there shall be inserted “(read with section 25(6)(c) of the [1990 c. 29.] Finance Act 1990 where applicable)”.

9

In paragraph 4(1)(b) of Schedule 13B to that Act (children’s tax credit), after “section 256(2)(b)” there shall be inserted “(read with section 25(6)(c) of the [1990 c. 29.] Finance Act 1990 where applicable)”.

10

This section has effect in relation to—

a

gifts made on or after 6th April 2000 which are not covenanted payments; and

b

covenanted payments falling to be made on or after that date;

and any regulations made under subsection (3) of section 25 of the [1990 c. 29.] Finance Act 1990 (as substituted by subsection (4) above) within three months of the passing of this Act may be so made as to apply to any payments in relation to which this section has effect.

40Gift aid payments by companies

1

Section 339 of the Taxes Act 1988 (charges on income: donations to charity) shall be amended in accordance with subsections (2) to (8) below.

2

In subsection (1), for paragraph (a) there shall be substituted—

a

a payment which, by reason of any provision of the Taxes Acts (within the meaning of the Management Act) except section 209(4), is to be regarded as a distribution; and

3

Subsections (2), (3), (3A), (3F), (6), (7) and (8) shall cease to have effect.

4

In subsection (3B)(b), for “two and a half per cent. of the amount given after deducting tax under section 339(3)” there shall be substituted “the limit imposed by subsection (3DA) below”.

5

After subsection (3D) there shall be inserted—

3DA

The limit imposed by this subsection is—

a

where the amount of the payment does not exceed £100, 25 per cent of the amount of the payment;

b

where the amount of the payment exceeds £100 but does not exceed £1,000, £25;

c

where the amount of the payment exceeds £1,000, 2.5 per cent of the amount of the payment.

3DB

Where a benefit received in consequence of making a payment—

a

consists of the right to receive benefits at intervals over a period of less than twelve months;

b

relates to a period of less than twelve months; or

c

is one of a series of benefits received at intervals in consequence of making a series of payments at intervals of less than twelve months,

the value of the benefit shall be adjusted for the purposes of subsection (3C) above and the amount of the payment shall be adjusted for the purposes of subsection (3DA) above.

3DC

Where a benefit, other than a benefit which is one of a series of benefits received at intervals, is received in consequence of making a payment which is one of a series of payments made at intervals of less than twelve months, the amount of the payment shall be adjusted for the purposes of subsection (3DA) above.

3DD

Where the value of a benefit, or the amount of a payment, falls to be adjusted under subsection (3DB) or (3DC) above, the value or amount shall be multiplied by 365 and the result shall be divided by—

a

in a case falling within subsection (3DB)(a) or (b) above, the number of days in the period of less than twelve months;

b

in a case falling within subsection (3DB)(c) or (3DC) above, the average number of days in the intervals of less than twelve months;

and the reference in subsection (3DB) to subsection (3C) above is a reference to that subsection as it applies for the purposes of subsection (3B) above.

6

For subsection (4) there shall be substituted—

4

Where a company gives a sum of money to a charity, the gift shall in the hands of the charity be treated for the purposes of this Act as if it were an annual payment.

7

For subsection (7AA) there shall be substituted—

7AA

Where—

a

a qualifying donation to a charity is made by a company which is wholly owned by a charity, and

b

the company makes a claim for the donation, or any part of it, to be deemed for the purposes of section 338 to be a charge on income paid in an accounting period falling wholly or partly within the period of nine months ending with the date of the making of the donation,

the donation or part shall be deemed for those purposes to be a charge on income paid in that accounting period, and not in any later period.

A claim under this subsection must be made within the period of two years immediately following the accounting period in which the donation is made, or such longer period as the Board may allow.

8

In subsection (9), the words “in subsections (1) to (4) above includes” shall cease to have effect.

9

In subsection (1) of section 209 of the Taxes Act 1988 (meaning of “distribution”), for “section 339(6) and any other express exceptions” there shall be substituted “any express exceptions”.

10

In subsection (2)(a) of section 338 of that Act (allowance of charges on income and capital), after “company” there shall be inserted “or payments falling within paragraph (b) below”.

11

This section has effect in relation to payments made on or after 1st April 2000; and—

a

so much of an accounting period as falls before that date; and

b

so much of it as falls after 31st March 2000,

shall be treated as separate accounting periods for the purposes of the amendment made by subsection (5) above.

41Covenanted payments to charities

1

In subsection (5)(b) of section 338 of the Taxes Act 1988 (allowances of charges on income and capital), for “a covenanted donation to charity” there shall be substituted “a qualifying donation”.

2

In section 347A of that Act (annual payments and interest: general rule), subsections (2)(b), (7) and (8) shall cease to have effect.

3

In subsection (3) of section 348 of that Act (payments out of profits or gains brought into charge to income tax: deductions of tax), at the end there shall be inserted “or to any payment which is a qualifying donation for the purposes of section 25 of the [1990 c. 29.] Finance Act 1990”.

4

In subsection (1) of section 349 of that Act (payments not out of profits or gains brought into charge to income tax, and annual interest), at the end there shall be inserted “or to any payment which is a qualifying donation (within the meaning of section 339) or a qualifying donation for the purposes of section 25 of the [1990 c. 29.] Finance Act 1990”.

5

In subsection (6) of section 505 of that Act (charities: general), the words “and, for this purpose, all covenanted payments to charity (within the meaning of section 347A(7)) shall be treated as a single item” shall cease to have effect.

6

In subsection (9) of section 660A of that Act (income arising under a settlement where settlor retains an interest), for paragraph (b) there shall be substituted—

b

qualifying donations for the purposes of section 25 of the Finance Act 1990.

7

Section 59 of the [1989 c. 26.] Finance Act 1989 (covenanted subscriptions) shall cease to have effect.

8

Where a deed of covenant executed by an individual before 6th April 2000 provides for the payment of specified amounts, any amount payable under the deed on or after that date shall be determined as if the individual were entitled to deduct tax from that amount at the basic rate.

9

This section shall have effect in relation to covenanted payments—

a

falling to be made by individuals on or after 6th April 2000; or

b

made by companies on or after 1st April 2000.

42Millennium gift aid

1

In section 48 of the [1998 c. 36.] Finance Act 1998 (gifts of money for relief in poor countries), subsections (3), (6) and (7) shall cease to have effect.

2

In subsection (4) of that section—

a

in paragraph (a), after “made” there shall be inserted “before 6th April 2000”;

b

after paragraph (b) there shall be inserted—

bb

the subsequent gift, or at least one of the subsequent gifts, is made on or after 6th April 2000;

c

in paragraph (c), for “appropriate certificate” there shall be substituted “appropriate declaration”.

3

In subsection (8) of that section, for the definition of “relevant gift” there shall be substituted—

relevant gift” means a gift to which this section applies—

a

which satisfies the requirements of subsection (2) of section 25 of the [1990 c. 29.] Finance Act 1990 (as amended by section 39 of the Finance Act 2000); or

b

which would satisfy those requirements if paragraph (e) of that subsection were disregarded.

43Gifts of shares and securities to charities etc

1

After section 587A of the Taxes Act 1988 there shall be inserted—

587BGifts of shares and securities to charities etc

1

Subsections (2) and (3) below apply where, otherwise than by way of a bargain made at arm’s length, an individual, or a company which is not itself a charity, disposes of the whole of the beneficial interest in a qualifying investment to a charity.

2

On a claim made in that behalf to an officer of the Board—

a

the relevant amount shall be allowed—

i

in the case of a disposal by an individual, as a deduction in calculating his total income for the purposes of income tax for the year of assessment in which the disposal is made;

ii

in the case of a disposal by a company, as a charge on income for the purposes of corporation tax for the accounting period in which the disposal is made; and

b

no relief in respect of the disposal shall be given under section 83A or any other provision of the Income Tax Acts;

but paragraph (a)(i) above shall not apply for the purposes of any computation under section 550(2)(a) or (b).

3

The consideration for which the charity’s acquisition of the qualifying investment is treated by virtue of section 257(2) of the 1992 Act as having been made—

a

shall be reduced by the relevant amount; or

b

where that consideration is less than that amount, shall be reduced to nil.

4

Subject to subsections (5) to (7) below, the relevant amount is an amount equal to—

a

where the disposal is a gift, the market value of the qualifying investment at the time when the disposal is made;

b

where the disposal is at an undervalue, the difference between that market value and the amount or value of the consideration for the disposal.

5

Where there are one or more benefits received in consequence of making the disposal which are received by the person making the disposal or a person connected with him, the relevant amount shall be reduced by the value of that benefit or, as the case may be, the aggregate value of those benefits; and section 839 applies for the purposes of this subsection.

6

Where the disposal is a gift, the relevant amount shall be increased by the amount of the incidental costs of making the disposal to the person making it.

7

Where the disposal is at an undervalue—

a

to the extent that the consideration for the disposal is less than that for which the disposal is treated as made by virtue of section 257(2)(a) of the 1992 Act, the relevant amount shall be increased by the amount of the incidental costs of making the disposal to the person making it; and

b

section 48 of that Act (consideration due after time of disposal) shall apply in relation to the computation of the relevant amount as it applies in relation to the computation of a gain.

8

In the case of a disposal by a company which is carrying on life assurance business—

a

if the company is charged to tax under Case I of Schedule D in respect of such business, subsections (2) and (3) above shall not apply;

b

if the company is not so charged to tax in respect of such business—

i

subsection (2)(a)(ii) above shall have effect as if for “a charge on income” there were substituted “an expense of management”; and

ii

the relevant amount given by subsection (4) above shall be reduced by so much (if any) of that amount as is not referable to basic life assurance and general annuity business;

and for the purpose of determining how much (if any) of that amount is not so referable, section 432A shall have effect as if that amount were a gain accruing on the disposal of the qualifying investment to the company.

9

In this section—

“authorised unit trust” and “open-ended investment company” have the meanings given by section 468;

charity” has the same meaning as in section 506 and includes each of the bodies mentioned in section 507(1);

the incidental costs of making the disposal to the person making it” shall be construed in accordance with section 38(2) of the 1992 Act;

“life assurance business” and related expressions have the same meaning as in Chapter I of Part XII;

offshore fund” means a collective investment scheme (within the meaning of the [1986 c. 60.] Financial Services Act 1986) which is constituted by any company, unit trust scheme or other arrangement falling within paragraph (a), (b) or (c) of section 759(1);

qualifying investment” means any of the following—

a

shares or securities which are listed or dealt in on a recognised stock exchange;

b

units in an authorised unit trust;

c

shares in an open-ended investment company; and

d

an interest in an offshore fund.

10

Subject to subsection (11) below, the market value of any qualifying investment shall be determined for the purposes of this section as for the purposes of the 1992 Act.

11

In the case of an interest in an offshore fund for which there are separate published buying and selling prices, section 272(5) of the 1992 Act (meaning of “market value” in relation to rights of unit holders in a unit trust scheme) shall apply with any necessary modifications for determining the market value of the interest for the purposes of this section.

2

In subsection (2) of section 338 of that Act (allowances of charges on income and capital), immediately before paragraph (a) there shall be inserted—

za

amounts allowed as charges on income under section 587B(2)(a)(ii);

3

This section has effect in relation to—

a

disposals made by individuals on or after 6th April 2000; and

b

disposals made by companies on or after 1st April 2000.

44Gifts to charity from certain trusts

1

Chapter IA of Part XV of the Taxes Act 1988 (liability of settlors) shall not apply to any qualifying income which arises under a trust the trustees of which are resident in the United Kingdom (a “UK trust”) if—

a

it is given by the trustees to a charity in the year of assessment in which it arises; or

b

it is income to which a charity is entitled under the terms of the trust.

2

Subject to subsection (3) below, where in any year of assessment qualifying income arising under a UK trust from different sources exceeds the amount of that income falling within subsection (1) above, that amount shall be rateably apportioned between those sources.

3

Nothing in subsection (2) above shall affect the operation of any requirement that the whole, or any specified part, of the income from a particular source be given to a charity.

4

Where in any year of assessment qualifying income arising under a UK trust exceeds the amount of that income falling within subsection (1) above, any management expenses for that year shall be rateably apportioned between—

a

so much of that income as is equal to that amount; and

b

so much of that income as exceeds that amount.

5

In this section—

charity” has the same meaning as in section 506 of the Taxes Act 1988 and includes each of the bodies mentioned in section 507 of that Act;

qualifying income” means—

i

income which is to be accumulated;

ii

income which is payable at the discretion of the trustees or any other person (whether or not the trustees have power to accumulate it); or

iii

income which (before being distributed) is income of any person other than the trustees;

resident”, in relation to the trustees of a trust, shall be construed in accordance with section 110 of the [1989 c. 26.] Finance Act 1989;

and the reference to Chapter IA of Part XV of the Taxes Act 1988 includes a reference to that Chapter as it has effect by virtue of section 660E of that Act (application to settlements by two or more settlors).

6

This section has effect in relation to qualifying income arising to a UK trust on or after 6th April 2000.

45Loans to charities

1

In Chapter IA of Part XV of the Taxes Act 1988 “settlement” does not include any arrangement so far as it consists of a loan of money made by an individual to a charity either—

a

for no consideration; or

b

for a consideration which consists only of interest.

2

In this section “charity” has the same meaning as in section 44 above.

3

This section has effect in relation to income arising on or after 6th April 2000 on loans made before, as well as loans made on or after, that date.

46Exemption for small trades etc

1

Subject to subsection (2) below, exemption from tax under Case I or VI of Schedule D shall be granted, on a claim made in that behalf to the Board, in respect of any income of a charity if the requirements of subsection (3) below are satisfied with respect to the income.

2

Exemption shall not be granted under subsection (1) above in respect of income which is chargeable to tax under Case VI of Schedule D by virtue of any of the following—

a

section 30 of the [1970 c. 9.] Taxes Management Act 1970;

b

sections 214, 412, 547(1)(b) and (6), 553(6), 660C, 677, 703, 776, 788, 790 and 804 of the Taxes Act 1988;

c

paragraph 14 of Schedule 4 to the [1997 c. 58.] Finance (No. 2) Act 1997;

d

paragraph 52(4) of Schedule 18, and paragraph 13(7) of Schedule 19, to the [1998 c. 36.] Finance Act 1998; and

e

any other enactment specified in an order made by the Treasury.

3

The requirements of this subsection are satisfied with respect to any income for a chargeable period if it is applied solely for the purposes of the charity and either—

a

the charity’s gross income for the chargeable period does not exceed the requisite limit; or

b

the charity had, at the beginning of the period, a reasonable expectation that its gross income for the period would not exceed that limit.

4

Subject to subsection (5) below, the requisite limit is whichever is the greater of—

a

£5,000; and

b

whichever is the lesser of £50,000 and 25% of all of the charity’s incoming resources for the chargeable period.

5

For a chargeable period of less than twelve months, the amounts of £5,000 and £50,000 specified in subsection (4) above shall be proportionally reduced.

6

In this section—

charity” means any body of persons or trust established for charitable purposes only;

gross income”, in relation to a charity, means income before deduction of any expenses;

income”, in relation to a charity, means any profits or gains or other income which is chargeable to tax under Case I or VI of Schedule D and which is not, apart this section, exempted from tax under that Case.

7

This section applies for the year 2000-01 and subsequent years of assessment or, in the case of charities which are companies, for accounting periods beginning on or after 1st April 2000.

Employee share ownership

47Employee share ownership plans

Schedule 8 to this Act (employee share ownership plans) shall have effect.

48Relief for transfers to employee share ownership plans

1

In the [1992 c. 12.] Taxation of Chargeable Gains Act 1992, after section 236 insert—

Employee share ownership plans

236ARelief for transfers to employee share ownership plans

Schedule 7C (which makes provision for roll-over relief where shares are transferred to an approved employee share ownership plan) shall have effect.

2

After Schedule 7B to that Act insert the Schedule 7C set out in Schedule 9 to this Act.

49Phasing out of approved profit sharing schemes

1

The Board shall not approve a profit sharing scheme under Schedule 9 to the Taxes Act 1988 (approval of share option schemes and profit sharing schemes) unless the application for approval is received by the Board before 6th April 2001.

2

For the purposes of subsection (1) an application for approval which is not accompanied by the particulars and evidence referred to in paragraph 1(2) of that Schedule is not regarded as received by the Board until the required particulars and evidence have been received by them.

3

In section 186 of that Act (approved profit sharing schemes), in subsection (1) (under which the section applies to appropriations of shares made after 5th April 1979) after “5th April 1979” insert “and before 1st January 2003”.

50Phasing out of relief for payments to trustees of profit sharing schemes

1

This section has effect to phase out deductions under section 85 of the Taxes Act 1988 (corporation tax relief for payments to trustees of approved profit sharing schemes).

2

In the case of sums paid to the trustees on or after 21st March 2000 and before 6th April 2002 no deduction may be made by virtue of subsection (2)(a) of that section (sums applied in acquiring shares for appropriation) unless the trustees appropriate the shares acquired, by the application of the sum, as mentioned in that provision—

a

before the end of the period of nine months beginning on the day following the end of the period of account in which payment to the trustees was made, and

b

before 1st January 2003.

3

No deduction may be made by virtue of subsection (2)(a) of that section in respect of any sum paid to the trustees on or after 6th April 2002.

4

No deduction may be made by virtue of subsection (2)(b) of that section (sums to meet expenses of trustees in administering the scheme) in respect of any sum paid to the trustees more than three years after the date of the last appropriation of shares to individuals which was made—

a

in accordance with the approved profit sharing scheme, and

b

before 1st January 2003.

5

For the purposes of this section references to a deduction under section 85 are to a deduction under subsection (1)(a) or by virtue of subsection (1)(b) of that section.

51Approved profit sharing scheme: other awards of shares

1

In Schedule 9 to the Taxes Act 1988 (approved share option schemes and profit sharing schemes), in paragraph 3(2) (grounds for withdrawing approval of profit sharing schemes), after “below” in paragraph (e) insert—

,; or

f

the trustees appropriate shares to participants, one or more of whom have had free shares appropriated to them, at an earlier time in the same year of assessment, under a relevant share plan

2

After paragraph 3(3) of that Schedule insert—

4

For the purposes of sub-paragraph (2)(f) above the reference to persons having had free shares appropriated to them includes persons who would have had free shares appropriated to them but for their failure to obtain a performance allowance (within the meaning of paragraph 25 of Schedule 8 to the Finance Act 2000).

5

In sub-paragraph (2)(f) and (4) above—

free shares” has the same meaning as in Schedule 8 to the Finance Act 2000;

relevant share plan”, in relation to a profit sharing scheme, means an employee share ownership plan that—

a

was established by the grantor or a connected company, and

b

is approved under Schedule 8 to that Act.

6

For the purposes of sub-paragraph (5) above “connected company” means—

a

a company which controls or is controlled by the grantor or which is controlled by a company which also controls the grantor, or

b

a company which is a member of a consortium owning the grantor or which is owned in part by the grantor as a member of a consortium.

52Approved profit sharing schemes: restriction on type of shares

1

Schedule 9 to the Taxes Act 1988 (share option schemes and profit sharing schemes) is amended in accordance with subsections (2) to (4).

2

In paragraph 9(1) (requirements to be satisfied by shares in share option schemes), after “below” insert “(disregarding paragraph 11A)”.

3

After paragraph 11 (requirements as to listing etc.) insert—

11A

1

In the case of a profit sharing scheme, scheme shares must not be shares—

a

in an employer company, or

b

in a company that—

i

has control of an employer company, and

ii

is under the control of a person or persons within sub-paragraph (2)(b)(i) below in relation to an employer company.

2

For the purposes of this paragraph a company is “an employer company” if—

a

the business carried on by it consists substantially in the provision of the services of the persons employed by it, and

b

the majority of those services are provided to—

i

a person who has, or two or more persons who together have, control of the company, or

ii

a company associated with the company.

3

For the purposes of sub-paragraph (2)(b)(ii) above a company shall be treated as associated with another company if both companies are under the control of the same person or persons.

4

For the purposes of sub-paragraphs (1) to (3) above—

a

references to a person include a partnership, and

b

where a partner, alone or together with others, has control of a company, the partnership shall be treated as having like control of that company.

5

For the purposes of this paragraph the question whether a person controls a company shall be determined in accordance with section 416(2) to (6).

4

In paragraph 12—

a

in sub-paragraph (1), in paragraph (c) for “other than” to the end of that paragraph there shall be substituted “other than those permitted by sub-paragraph (1A) below.”, and

b

after sub-paragraph (1) insert—

1A

Subject to sub-paragraph (1B) below, scheme shares may be subject to—

a

restrictions which attach to all shares of the same class, or

b

a restriction authorised by sub-paragraph (2) below.

1B

In the case of a profit sharing scheme, scheme shares must not be subject to any restrictions affecting the rights attaching to those shares which relate to—

a

dividends, or

b

assets on a winding-up of the company,

other than restrictions which attach to all other ordinary shares in the same company.

5

Subsections (1) to (4) shall be deemed to have come into force on 21st March 2000.

6

Subsections (3) and (4) do not have effect in relation to shares acquired before 21st March 2000 by the trustees of a profit sharing scheme approved under Schedule 9 to the Taxes Act 1988.

53Approved profit sharing schemes: loan arrangements

1

In paragraph 2 of Schedule 9 to the Taxes Act 1988 (conditions for approval of share option schemes and profit sharing schemes), after sub-paragraph (2) insert—

2A

The Board shall not approve a profit sharing scheme unless they are satisfied—

a

that the arrangements for the scheme do not make any provision, and are not in any way associated with any provision made, for loans to some or all of the employees of—

i

the company that established the scheme, or

ii

in the case of a group scheme, any participating company, and

b

that the operation of the scheme is not in any way associated with such loans.

2B

For the purposes of sub-paragraph (2A) above “arrangements” includes any scheme, agreement or understanding, whether or not legally enforceable.

2

In paragraph 3(2) of that Schedule (withdrawal of approval of profit sharing schemes), before paragraph (d) insert—

ca

the Board—

i

cease to be satisfied of the matters mentioned in paragraph 2(2A) above, or

ii

in the case of a scheme approved before 21st March 2000, are not satisfied of those matters; or

3

This section shall be deemed to have come into force on 21st March 2000.

54Employee share ownership trusts

No claim for relief under section 229(1) or (3) of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (roll-over relief where disposal made to employee share ownership trust) may be made in relation to a disposal of shares, or an interest in shares, made on or after 6th April 2001.

55Shares transferred from employee share ownership trust

1

Section 69 of the [1989 c. 26.] Finance Act 1989 (chargeable events in relation to employee share ownership trusts) is amended in accordance with subsections (2) to (5).

2

In subsection (1) (definition of “chargeable event”), after paragraph (d) insert—

e

where—

i

the trustees make a qualifying transfer within subsection (3AA) below for a consideration, and

ii

they do not, during the period specified in subsection (5A) below, expend a sum of not less than the amount of that consideration for one or more qualifying purposes,

the expiry of that period.

3

After subsection (3) insert—

3AA

For the purposes of subsection (1)(a) above a transfer is also a qualifying transfer if—

a

it is a transfer of relevant shares made to the trustees of the plan trust of an employee share ownership plan,

b

the plan is approved under Schedule 8 to the Finance Act 2000 when the transfer is made, and

c

the consideration (if any) for which the transfer is made does not exceed the market value of the shares.

3AB

For the purpose of determining whether a transfer by the trustees is a qualifying transfer within subsection (3AA) above, where on or after 21st March 2000—

a

the trustees transfer or dispose of part of a holding of shares (whether by way of a qualifying transfer or otherwise), and

b

the holding includes any relevant shares,

the relevant shares shall be treated as transferred or disposed of before any other shares included in that holding.

For this purpose “holding” means any number of shares of the same class held by the trustees, growing or diminishing as shares of that class are acquired or disposed of.

3AC

For the purposes of subsections (3AA) and (3AB) above—

market value” has the same meaning as in Schedule 8 to the Finance Act 2000; and

relevant shares” means—

i

shares that are held by the trustees of the employee share ownership trust at midnight on 20th March 2000, and

ii

shares purchased by those trustees with original funds after that time.

3AD

For the purposes of subsection (3AC) above—

a

original funds” means any money held by the trustees of the employee share ownership trust in a bank or building society account at midnight on 20th March 2000, and

b

any payment made by the trustees after that time (whether to acquire shares or otherwise) shall be treated as made out of original funds (and not out of money received after that time) until those funds are exhausted.

4

In subsection (5) after “(1)(d)” insert “or (e)”.

5

After that subsection insert—

5A

The period referred to in paragraph (e) of subsection (1) above is the period—

a

beginning with the qualifying transfer mentioned in that paragraph, and

b

ending nine months after the end of the period of account in which that qualifying transfer took place.

For this purpose the period of account means the period of account of the company that established the employee share ownership trust.

6

In section 70 of the [1989 c. 26.] Finance Act 1989 (chargeable amounts), after subsection (3) insert—

4

If the chargeable event falls within section 69(1)(e) above the chargeable amount is an amount equal to—

a

the amount of the consideration received for the qualifying transfer mentioned in section 69(1)(e) above, less

b

the amount of any expenditure by the trustees for a qualifying purpose during the period mentioned in section 69(5A) above.

56Further provisions about share options

1

In Chapter IV of Part V of the Taxes Act 1988 (provisions relating to the Schedule E charge: other exemptions and reliefs), after section 187 insert—

Contributions in respect of share option gains

187ARelief for contributions in respect of share option gains

1

Where a person (“the earner”) is chargeable to tax under section 135 on a gain, relief is available under this section if—

a

an agreement has been entered into allowing the secondary contributor to recover from the earner the whole or part of any secondary Class 1 contributions in respect of the gain, or

b

an election is in force which has the effect of transferring to the earner the whole or part of the liability to pay secondary Class 1 contributions in respect of the gain.

2

The amount of the relief is the total of—

a

any amount that, in pursuance of any such agreement as is mentioned in subsection (1)(a), is recovered in respect of the gain by the secondary contributor not later than 60 days after the end of the year of assessment in which occurred the event giving rise to the charge to tax under section 135; and

b

the amount of any liability in respect of that gain that, by virtue of any such election as is mentioned in subsection (1)(b), has become the earner’s liability.

3

Where notice of withdrawal of approval of any such election is given, relief under subsection (2)(b) is limited to so much of the earner’s liability in respect of the gain as is met before the end of the 60th day after the end of the year of assessment in which occurred the event giving rise to the charge under section 135.

4

Relief under this section shall be given by way of deduction from the amount of the gain on which the earner is chargeable to tax under section 135.

5

Any such deduction does not affect the amount of the gain for the purposes of—

a

section 120(4) of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (amount treated as consideration for acquisition of shares), or

b

section 4(4)(a) of the Contributions and Benefits Act (amount treated as remuneration for contributions purposes).

6

The agreements and elections referred to in this section are those having effect under paragraph 3A or 3B of Schedule 1 to the Contributions and Benefits Act.

References to approval in relation to an election are to approval by the Inland Revenue under paragraph 3B of that Schedule.

7

In this section—

“the Contributions and Benefits Act” means the [1992 c. 4.] Social Security Contributions and Benefits Act 1992 or the [1992 c. 7.] Social Security Contributions and Benefits (Northern Ireland) Act 1992; and

secondary Class 1 contributions” and “secondary contributor” have the same meaning as in that Act.

Section 187A inserted by this subsection applies to any agreement or election having effect as mentioned in subsection (6) of that section, whether made before or after the passing of this Act.

2

Section 203FB of the Taxes Act 1988 (PAYE: gains from share options) is amended as follows—

a

in subsections (2) and (3), for “subsection (7)” substitute “subsection (6A)”;

b

after subsection (6) insert—

6A

Where section 203F has effect in accordance with subsection (2) or (3) above, subsection (3) of section 203F shall apply as if the reference in that subsection to the amount of income likely to be chargeable to tax under Schedule E in respect of the provision of the asset were a reference to the amount on which tax is likely to be chargeable by virtue of section 135 in respect of the event in question, reduced by the amount of any relief likely to be available under section 187A.

c

in subsection (7), for “any of the preceding provisions of this section” substitute “subsection (4) or (5) above” and for “section 135, 140A or 140D” substitute “section 140A or 140D”.

These amendments apply where the event giving rise to the charge to tax occurs after the passing of this Act.

3

In section 136(6) of the Taxes Act 1988 and section 85(1) of the [1988 c. 39.] Finance Act 1988 (duty to deliver particulars relating to share options, etc. within 30 days after end of year of assessment), for “30 days” substitute “92 days”.

These amendments apply where the event giving rise to the duty to deliver particulars occurs on or after 6th April 2000.

4

After section 136(6) of the Taxes Act 1988 add—

7

A body corporate is not obliged to deliver particulars under subsection (6) above which it has already given in a notice under paragraph 2 of Schedule 14 to the Finance Act 2000 (enterprise management incentives: notice required for option to be qualifying option).

In other respects the obligations imposed by that subsection and that paragraph are independent of each other.

8

The duty of a body corporate under subsection (6) above to deliver particulars of any matter includes a duty to deliver particulars of any secondary Class 1 contributions payable in connection with that matter that—

a

are recovered as mentioned in section 187A(2)(a), or

b

are met as mentioned in section 187A(3).

In this subsection “secondary Class 1 contributions” has the same meaning as in section 187A.

Section 136(8) inserted by this subsection applies to any amounts recovered or met as mentioned in section 187A(2)(a) or (3) of the Taxes Act 1988, whether before or after the passing of this Act.

Other provisions about employment

57Benefits in kind: deregulatory amendments

1

Chapter II of Part V of the Taxes Act 1988 (provisions relating to the Schedule E charge: benefits in kind, etc.) is amended in accordance with Schedule 10 to this Act.

2

The amendments have effect for the year 2000-01 and subsequent years of assessment.

58Education and Training

1

After section 200D of the Taxes Act 1988 (work-related training) insert—

200EEducation and training funded by employers

1

This section applies for the purposes of Schedule E where any person (in this section, and sections 200F and 200G, called “the employer”) incurs expenditure—

a

by making a payment to a person (“the provider”) in respect of the costs of any qualifying education or training provided by the provider to a fundable employee of the employer (in this section, and sections 200F and 200G, called “the employee”), or

b

in paying or reimbursing any related costs.

2

Subject to sections 200F to 200H, the emoluments of the employee from the office or employment shall not be taken to include—

a

any amount in respect of that expenditure, or

b

any amount in respect of the benefit of the education or training provided by means of that expenditure.

3

In subsection (1) above “related costs”, in relation to any qualifying education or training provided to the employee, means—

a

any costs that are incidental to the employee’s undertaking the education or training and are incurred wholly and exclusively as a result of his doing so;

b

any expenses incurred in connection with an assessment (whether by examination or otherwise) of what the employee has gained from the education or training; and

c

the cost of obtaining for the employee any qualification, registration or award to which he has or may become entitled as a result of undertaking the education or training or of undergoing such an assessment.

4

In this section “qualifying education or training” means education or training of a kind that qualifies for grants whose payment is authorised by—

a

regulations under section 108 or 109 of the Learning and Skills Act 2000, or

b

regulations under section 1 of the [2000 c. 21. 2000 asp 8.] Education and Training (Scotland) Act 2000.

5

For the purposes of this section, a person is a fundable employee of the employer if—

a

he holds, or has at any time held, an office or employment under the employer, and

b

he holds an account that qualifies under section 104 of the Learning and Skills Act 2000 or he is a party to qualifying arrangements.

6

In subsection (5) above “qualifying arrangements” means arrangements which qualify under—

a

section 105 or 106 of the Learning and Skills Act 2000, or

b

section 2 of the Education and Training (Scotland) Act 2000.

200FSection 200E: exclusion of expenditure not directly related to training

1

Section 200E shall not apply in the case of any expenditure to the extent that it is incurred in paying or reimbursing the cost of any facilities or other benefits provided or made available to the employee for either or both of the following purposes, that is to say—

a

enabling the employee to enjoy the facilities or benefits for entertainment or recreational purposes;

b

rewarding the employee for the performance of the duties of his office or employment under the employer, or for the manner in which he has performed them.

2

Section 200E shall not apply in the case of any expenditure incurred in paying or reimbursing any expenses of travelling or subsistence, except to the extent that those expenses would be deductible under section 198 if the employee—

a

undertook the education or training in question in the performance of the duties of—

i

his office or employment under the employer, or

ii

where the employee no longer holds an office or employment under the employer, the last office or employment that he did hold under the employer; and

b

incurred those expenses out of the emoluments of that office or employment.

3

Section 200E shall not apply in the case of any expenditure incurred in paying or reimbursing the cost of providing the employee with, or with the use of, any asset except where—

a

the asset is provided or made available for use only in the course of the education or training;

b

the asset is provided or made available for use in the course of the education or training and in the performance of the duties of the employee’s office or employment but not to any significant extent for any other use;

c

the asset consists in training materials provided in the course of the education or training; or

d

the asset consists in something made by the employee in the course of the education or training or incorporated into something so made.

4

In subsection (1) above the reference to enjoying facilities or benefits for entertainment or recreational purposes includes a reference to enjoying them in the course of any leisure activity.

5

In this section—

subsistence” includes food and drink and temporary living accommodation; and

training materials” means stationery, books or other written material, audio or video tapes, compact disks or floppy disks.

200GSection 200E: exclusion of expenditure if contributions not generally available to staff

1

Section 200E shall not apply to any expenditure incurred in respect of—

a

the costs of any education or training provided to the employee, or

b

any related costs,

unless the expenditure is incurred in giving effect to fair-opportunity arrangements that were in place at the time when the employer agreed to incur the expenditure.

In this subsection “related costs”, in relation to any education or training provided to the employee, has the meaning given by section 200E(3).

2

For the purposes of subsection (1) above “fair-opportunity arrangements” are in place at any time if at that time arrangements are in place that provide—

a

for the making of contributions by the employer to costs arising from qualifying education or training being undertaken by persons who hold, or have held, an office or employment under the employer, and

b

for such contributions to be generally available, on similar terms, to the persons who at that time hold an office or employment under the employer.

In this subsection “qualifying education or training” has the same meaning as in section 200E.

3

The Treasury may by regulations make provision specifying the persons or other entities under whom Crown servants are to be treated for the purposes of this section as holding office or employment; and such regulations may—

a

deem a description of Crown servants (or two or more such descriptions taken together) to be an entity for the purposes of the regulations;

b

make different provision for different descriptions of Crown servants.

In this subsection “Crown servant” means a person holding an office or employment under the Crown.

200HSection 200E: exclusion of expenditure otherwise relieved

Section 200E does not apply to expenditure to the extent that—

a

section 200B (expenditure on work-related training) applies to it, or

b

section 588(1) (expenditure on retraining courses) has effect in respect of it.

200JEducation or training funded by third parties

1

This section applies where—

a

any person (“the employee”) who holds, or has at any time held, an office or employment under another (“the employer”) is provided by reason of that office or employment with any benefit,

b

that benefit consists in any qualifying education or training or is provided in connection with any such education or training, and

c

the amount which (apart from this section and sections 200E to 200H) would be included in respect of that benefit in the emoluments of the employee (“the chargeable amount”) is or includes an amount that does not represent expenditure incurred by the employer.

2

For the purposes of Schedule E, the questions whether and to what extent those emoluments shall be taken to include an amount in respect of that benefit shall be determined in accordance with sections 200E to 200H as if the benefit had been provided by means of a payment by the employer of an amount equal to the whole of the chargeable amount.

3

In this section “qualifying education or training” has the same meaning as in section 200E.

2

In section 200A(3)(b) of that Act (definition of a qualifying absence from home), at the end of sub-paragraph (iv) insert

, or

v

expenses the amount of which, having been paid or reimbursed by the person under whom he holds that office or employment, is excluded from his emoluments in pursuance of section 200E, or

vi

expenses the amount of which would be so excluded if it were so paid or reimbursed.

3

This section applies for the year 2000-01 and subsequent years of assessment.

59Cars available for private use

Schedule 11 to this Act (which makes provision in relation to the taxation of cars available for private use) has effect for the year 2002-03 and subsequent years of assessment.

60Provision of services through intermediary

Schedule 12 to this Act has effect with respect to the provision of services through an intermediary.

Pension schemes

61Occupational and personal pension schemes

Schedule 13 to this Act (which makes provision in relation to occupational and personal pension schemes) has effect.

Enterprise incentives

62Enterprise management incentives

Schedule 14 to this Act (enterprise management incentives) has effect in relation to any right to acquire shares granted after the passing of this Act.

63Corporate venturing scheme

1

Schedule 15 to this Act (which makes provision for the corporate venturing scheme) has effect.

2

Schedule 16 to this Act (which makes consequential amendments) has effect.

3

Paragraph 3(2)(a)(i) to (iii) and (3) of Schedule 16 (and paragraph 3(1) so far as it relates to those provisions) have effect—

a

in relation to claims made under section 573 of the Taxes Act 1988, in respect of disposals on or after 1st April 2000, and

b

in relation to claims made under section 574 of that Act, in respect of disposals on or after 6th April 2000.

4

Subject to that, Schedules 15 and 16 apply in relation to shares issued on or after 1st April 2000 but before 1st April 2010.

64Enterprise investment scheme: amendments

The provisions relating to the enterprise investment scheme are amended in accordance with Schedule 17 to this Act.

In that Schedule—

Part I makes amendments reducing various periods which apply in relation to the provisions which determine the reliefs under the scheme;

Part II makes amendments about qualifying companies;

Part III makes other minor amendments.

65Venture capital trusts: amendments

The provisions relating to venture capital trusts are amended in accordance with Schedule 18 to this Act.

In that Schedule—

Part I makes amendments reducing various periods which apply in relation to the provisions which determine the reliefs; and

Part II makes amendments about qualifying holdings.

66Taper relief: taper for business assets

1

Section 2A of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (taper relief) is amended as follows.

2

In subsection (5), for the first two columns of the table (which relate to gains on disposals of business assets) substitute—

Gains on disposals of business assets

Number of whole years in qualifying holding period

Percentage of gain chargeable

1

87.5

2

75

3

50

4 or more

25

3

For subsections (8) and (9) substitute—

8

The qualifying holding period of an asset for the purposes of this section is—

a

in the case of a business asset, the period after 5th April 1998 for which the asset had been held at the time of its disposal;

b

in the case of a non-business asset where—

i

the time which, for the purposes of paragraph 2 of Schedule A1, is the time when the asset is taken to have been acquired by the person making the disposal is a time before 17th March 1998, and

ii

there is no period which by virtue of paragraph 11 or 12 of that Schedule does not count for the purposes of taper relief,

the period mentioned in paragraph (a) plus one year;

c

in the case of any other non-business asset, the period mentioned in paragraph (a).

This subsection is subject to paragraph 2(4) of Schedule A1 and paragraph 3 of Schedule 5BA.

4

This section applies to disposals on or after 6th April 2000.

67Taper relief: assets qualifying as business assets

1

Schedule A1 to the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (application of taper relief) is amended as follows.

2

In paragraph 4 (conditions for shares to qualify as business assets)—

a

in sub-paragraph (4) (disposal by personal representatives), for the words following “if at that time” substitute “the relevant company was a qualifying company by reference to the personal representatives”; and

b

in sub-paragraph (5) (disposal by legatee), for paragraph (b) substitute—

b

the relevant company was a qualifying company by reference to the personal representatives.

3

In paragraph 5 (conditions for other assets to qualify as business assets)—

a

in sub-paragraph (2) (disposal by individual), for paragraphs (d) and (e) substitute—

d

the purposes of any office or employment held by that individual with a person carrying on a trade.

and

b

in sub-paragraph (3) (disposal by trustees of settlement), for paragraphs (e) and (f) substitute—

e

the purposes of any office or employment held by an eligible beneficiary with a person carrying on a trade.

4

For paragraph 6 (companies which are qualifying companies) substitute—

6

1

A company shall be taken to have been a qualifying company by reference to an individual at any time when—

a

the company was a trading company or the holding company of a trading group, and

b

one or more of the following conditions was met—

i

the company was unlisted,

ii

the individual was an officer or employee of the company, or of a company having a relevant connection with it, or

iii

the voting rights in the company were exercisable, as to not less than 5%, by the individual.

2

A company shall be taken to have been a qualifying company by reference to the trustees of a settlement at any time when—

a

the company was a trading company or the holding company of a trading group, and

b

one or more of the following conditions was met—

i

the company was unlisted,

ii

an eligible beneficiary was an officer or employee of the company, or of a company having a relevant connection with it, or

iii

the voting rights in the company were exercisable, as to not less than 5%, by the trustees.

3

A company shall be taken to have been a qualifying company by reference to an individual’s personal representatives at any time when—

a

the company was a trading company or the holding company of a trading group, and

b

one or more of the following conditions was met—

i

the company was unlisted, or

ii

the voting rights in the company were exercisable, as to not less than 5%, by the personal representatives.

5

In paragraph 22(1) (interpretation), at the appropriate place insert—

unlisted company” means a company—

a

none of whose shares is listed on a recognised stock exchange, and

b

which is not a 51 per cent subsidiary of a company whose shares, or any class of whose shares, is so listed;

and omit the definitions of “full-time working officer or employee” and “qualifying office or employment”.

6

After paragraph 22 insert—

Qualifying shareholdings in joint venture companies

23

1

This Schedule has effect subject to the following provisions where a company (“the investing company”) has a qualifying shareholding in a joint venture company.

2

For the purposes of this paragraph a company is a “joint venture company” if, and only if—

a

it is a trading company or the holding company of a trading group, and

b

75% or more of its ordinary share capital (in aggregate) is held by not more than five companies.

For the purposes of paragraph (b) above the shareholdings of members of a group of companies shall be treated as held by a single company.

3

For the purposes of this paragraph a company has a “qualifying shareholding” in a joint venture company if—

a

it holds more than 30% of the ordinary share capital of the joint venture company, or

b

it is a member of a group of companies, it holds ordinary share capital of the joint venture company and the members of the group between them hold more than 30% of that share capital.

4

For the purpose of determining whether the investing company is a trading company—

a

any holding by it of shares in the joint venture company shall be disregarded, and

b

it shall be treated as carrying on an appropriate proportion—

i

of the activities of the joint venture company, or

ii

where the joint venture company is the holding company of a trading group, of the activities of that group.

This sub-paragraph does not apply if the investing company is a holding company.

5

For the purpose of determining whether the investing company is a holding company—

a

any holding by it of shares in the joint venture company shall be disregarded, and

b

it shall be treated as carrying on an appropriate proportion of the activities—

i

of the joint venture company, or

ii

where the joint venture company is the holding company of a trading group, of that group.

This sub-paragraph does not apply if the joint venture company is a 51 per cent subsidiary of the investing company.

6

For the purpose of determining whether a group of companies is a trading group—

a

every holding of shares in the joint venture company by a member of the group having a qualifying shareholding in that company shall be disregarded, and

b

each member of the group having such a qualifying shareholding shall be treated as carrying on an appropriate proportion of the activities—

i

of the joint venture company, or

ii

where the joint venture company is the holding company of a trading group, of that group.

This sub-paragraph does not apply if the joint venture company is a member of the group.

7

In sub-paragraphs (4)(b), (5)(b) and (6)(b) above “an appropriate proportion” means a proportion corresponding to the percentage of the ordinary share capital of the joint venture company held by the investing company or, as the case may be, by the group member concerned.

8

The following shall be treated as having a relevant connection with each other—

a

the investing company;

b

the joint venture company;

c

any company having a relevant connection with the investing company;

d

any company having a relevant connection with the joint venture company by virtue of being—

i

a 51 per cent subsidiary of that company, or

ii

a member of the same commercial association of companies.

9

The acquisition by the investing company of the qualifying shareholding shall not be treated as a relevant change of activity for the purposes of paragraph 11 above.

10

For the purposes of this paragraph “ordinary share capital” has the meaning given by section 832(1) of the Taxes Act.

7

This section has effect for determining whether an asset is a business asset at any time on or after 6th April 2000.

It does not affect the determination on or after that date whether an asset was a business asset at a time before that date.

Research and development

68Meaning of “research and development”

1

Schedule 19 to this Act (meaning of “research and development”) has effect.

In that Schedule—

Part I contains a new definition of “research and development” for the purposes of the Tax Acts, and

Part II contains consequential amendments.

2

The amendments in Part II of that Schedule have effect—

a

for the purposes of income tax and capital gains tax, in relation to the year 2000-01 and subsequent years of assessment, and

b

for the purposes of corporation tax, for accounting periods ending on or after 1st April 2000.

69Tax relief for expenditure on research and development

1

Schedule 20 to this Act (tax relief for expenditure on research and development) has effect for accounting periods ending on or after 1st April 2000.

In that Schedule—

Part I provides for entitlement to relief,

Part II provides for the manner of giving effect to the relief, and

Part III contains supplementary provisions.

2

Schedule 21 to this Act (which contains consequential amendments) has effect accordingly.

Capital allowances

70First year allowances for small or medium-sized enterprises

1

In section 22(3D) of the [1990 c. 1.] Capital Allowances Act 1990 (expenditure qualifying for 40% first year allowances), for “in the period beginning with 2nd July 1998 and ending with 1st July 2000” substitute “on or after 2nd July 1998”.

2

In that Act—

a

in section 22(3C)(a), (3CA)(a) and (3D)(a), for “a small company or a small business” substitute “a small or medium-sized enterprise”;

b

in section 22A—

i

in the sidenote, for “small company or small business”,

ii

in subsection (1) for “small company”, and

iii

in subsection (2) for “small business”,

substitute “small or medium-sized enterprise”.

The amendments in this subsection are of nomenclature only.

71First year allowances for ICT expenditure by small enterprises

1

In section 22 of the Capital Allowances Act 1990 (first-year allowances), after subsection (3D) insert—

3E

This section applies to—

a

any expenditure on information and communications technology which, disregarding any effect of section 83(2) on the time at which it is to be treated as incurred, is incurred by a small enterprise in the period beginning with 1st April 2000 and ending with 31st March 2003; and

b

any additional VAT liability incurred in respect of expenditure to which this section applies by virtue of paragraph (a) above.

3F

For the purposes of subsection (3E) above expenditure on information and communications technology means expenditure on items within any of the classes set out in subsection (3G) below.

3G

The classes referred to in subsection (3F) above are as follows:

A. Computers and associated equipment

This class covers—

a

computers,

b

peripheral devices designed to be used by being connected to or inserted in a computer,

c

equipment (including cabling) for use primarily to provide a data connection—

i

between one computer and another, or

ii

between a computer and a data communications network,

d

dedicated electrical systems for computers.

For this purpose “computer” does not include computerised control or management systems or other systems that are part of a larger system whose principal function is not processing or storing information.

B. Other qualifying equipment

This class covers—

a

wireless application protocol telephones,

b

third generation mobile telephones,

c

devices designed to be used by being connected to a television set that are capable of receiving and transmitting information from and to data networks, and

d

other devices substantially similar to those within paragraphs (a), (b) and (c) that are capable of receiving and transmitting information from and to data networks.

This is subject to any order under subsection (3H) below.

C. Software

This class covers the right to use or otherwise deal with software for the purposes of any equipment within Class A or B above.

3H

The Treasury may make provision by order—

a

further defining the descriptions of equipment within Class B in subsection (3G), or

b

adding further descriptions of equipment to that class.

2

In sections 22(4), (6B) and (6C), 23(6), 42(9) and 50(3) and (4A) of that Act, for “and (3D)” substitute “, (3D) and (3E)”.

3

In sections 43(5), 44(5), 46(8) and 48(7) of that Act, for “or (3D)” substitute “, (3D) or (3E)”.

4

In section 39(2)(a) of that Act for “to (3D)” substitute “to (3E)”.

72Expenditure of a small enterprise

After section 22A of the [1990 c. 1.] Capital Allowances Act 1990, insert—

22AAExpenditure of a small enterprise

1

For the purposes of section 22 capital expenditure incurred by a company is capital expenditure incurred by a small enterprise if the company—

a

qualifies as small in relation to the financial year of the company in which the expenditure is incurred, and

b

is not a member of a large or medium-sized group at the time when the expenditure is incurred.

2

For the purposes of section 22, capital expenditure is capital expenditure incurred by a small enterprise if—

a

it is incurred by a business for the purposes of a trade (the “first trade”) carried on by that business, and

b

were the first trade carried on by a company (the “hypothetical company”) in the circumstances set out in subsection (3) below, that company would qualify as small in relation to the financial year of that company in which the expenditure would be treated as incurred.

3

Those circumstances are—

a

that every trade, profession or vocation carried on by the business concerned is carried on by the business as a part of the first trade,

b

that the financial years of the hypothetical company coincide with the chargeable periods of the business concerned, and

c

that accounts of the hypothetical company for any relevant chargeable period were prepared in accordance with the requirements of the Companies Act 1985 as if that period were a financial year of the company.

4

Subject to subsection (5) below, a company is a member of a large or medium-sized group at the time when any expenditure is incurred if —

a

it is at that time the parent undertaking of a group which does not qualify as small in relation to the financial year of the parent company in which that time falls; or

b

it is at that time a subsidiary undertaking in relation to the parent undertaking of such a group.

5

If, at the time when any expenditure is incurred by any company any arrangements exist which are such that, had effect been given to them immediately before that time, the company or a successor of the company would, at that time, have been a member of a large or medium-sized group, this section shall have effect as if the company concerned was a member of a large or medium-sized group at that time.

6

In this section the following expressions have the same meaning as in section 22A above: “arrangements”, “business”, “company”, “financial year”, “group”, “parent undertaking” and “subsidiary undertaking”.

7

References in this section, in relation to a company, to its qualifying as small—

a

except in the case of a company formed and registered in Northern Ireland, are references to its so qualifying, or being treated as so qualifying, for the purposes of section 247 of the [1985 c. 6.] Companies Act 1985; and

b

in the case of a company so formed and registered, are references to a company so qualifying, or being treated as so qualifying, for the purposes of Article 255 of the Companies (Northern Ireland) Order 1986.

8

In relation to a company with respect to which the question arises whether it is or would be a member of a large or medium-sized group, references to a group’s qualifying as small—

a

except in the case of a company formed and registered in Northern Ireland, are references to its so qualifying, or being treated as so qualifying, for the purposes of section 249 of the [1985 c. 6.] Companies Act 1985; and

b

in the case of a company so formed and registered, are references to its so qualifying, or being treated as so qualifying, for the purposes of Article 257 of the Companies (Northern Ireland) Order 1986;

but for the purposes of this section each of those provisions shall be construed as if references, in relation to a group, to the parent company were references to the parent undertaking.

9

For the purposes of this section a company is the successor of another if—

a

it carries on a trade which, in whole or in part, the other company has ceased to carry on, and

b

the circumstances are such that section 343 of the principal Act applies in relation to the two companies as the predecessor and the successor within the meaning of that section.

73Repeal of notification requirements

1

In section 118 of the [1994 c. 9.] Finance Act 1994 (notification requirements)—

a

subsections (1) to (5) and (7) to (9) shall cease to have effect; and

b

in subsection (6), for “the provisions mentioned in subsection (2) above” there shall be substituted—

a

section 25(1) of the Capital Allowances Act 1990 (meaning of qualifying expenditure for the purposes of writing-down allowances for expenditure on machinery or plant); and

b

section 44(4) of the Finance Act 1971 (provision corresponding to section 25(1) applicable to earlier chargeable periods),

2

This section has effect for chargeable periods as respects which the period specified in subsection (3A) of that section ends on or after 1st April 2000.

74Pool for certain leased assets and inexpensive cars

1

In section 41 of the [1990 c. 1.] Capital Allowances Act 1990 (writing-down allowances etc for leased assets and inexpensive cars)—

a

in subsection (1), paragraphs (b) and (c) and the word “or” at the end of paragraph (a); and

b

in subsection (4), paragraph (a) and, in paragraph (b), the words from “or within (1)(b) or (c)” to “subsection (1)(c)” and the words “or subsection (1)(b) or (c)”,

shall cease to have effect for chargeable periods ending on or after the relevant date.

2

Subsection (3) below applies where—

a

immediately before the end of the relevant chargeable period, a person was treated for the purposes of sections 24, 25 and 26 of the [1990 c. 1.] Capital Allowances Act 1990 as having incurred expenditure on the provision of machinery or plant wholly and exclusively for the purposes of a separate trade carried on by him;

b

the expenditure fell within subsection (1)(b) or (c) of section 41 of that Act; and

c

qualifying expenditure in respect of the separate trade for the relevant chargeable period exceeded any disposal value brought into account in respect of that trade for that period.

3

The balance of the excess (after the deduction of any writing-down allowances made by reference to it) shall be treated for the purposes of sections 24, 25 and 26 of the [1990 c. 1.] Capital Allowances Act 1990 as capital expenditure which—

a

was incurred by that person in the relevant chargeable period on the provision of the machinery or plant for the purposes of the trade which is the actual trade for the purposes of section 41 of that Act; and

b

does not form part of his qualifying expenditure for that period.

4

In this section—

the relevant chargeable period” means the chargeable period immediately preceding that which begins on or before and ends on or after the relevant date;

the relevant date” means, subject to subsection (5) below, 6th April 2000 for the purposes of income tax and 1st April 2000 for the purposes of corporation tax.

5

A person may, by a notice given to an officer of the Board, elect that this section shall have effect in relation to any trade carried on by him as if the relevant date were 6th April 2001 or, as the case may be, 1st April 2001.

75Machinery and plant allowances for non-residents etc

1

In section 83 of the [1990 c. 1.] Capital Allowances Act 1990 (interpretation of Part II), after subsection (2) there shall be inserted—

2A

In this Part (except in Chapter V and sections 64A and 75 to 78), references—

a

to a trade, or

b

to activities falling in accordance with section 28A, 29 or 61 to be treated as a trade,

shall be construed as if activities were capable of being comprised in a trade, or of being treated as a trade, to the extent only that they are activities the profits or gains from which are, or (if there were any) would be, chargeable to income tax or corporation tax.

2

After section 79 of that Act there shall be inserted—

79AReduction in qualifying use

1

This section applies where—

a

any expenditure falls, for the purposes of making allowances or charges, to be treated in accordance with section 79 as incurred on the provision of machinery or plant for the purposes of a notional trade;

b

there is such a change of circumstances as would make it appropriate for any reduction falling to be made under subsection (5) of that section—

i

for the chargeable period in which the change takes place (“the relevant chargeable period”), or

ii

for any subsequent chargeable period,

to represent a larger proportion of the amount reduced than would have been appropriate apart from the change;

c

no disposal value in respect of the machinery or plant would, apart from this section, fall to be brought into account for the relevant chargeable period; and

d

the open market value of the machinery or plant at the end of the relevant chargeable period exceeds the qualifying expenditure in respect of the notional trade for that period by more than £1 million.

2

It shall be assumed that the notional trade is permanently discontinued immediately before the end of the relevant chargeable period.

3

Section 79(3) shall have effect as if immediately after the beginning of the following chargeable period expenditure had been incurred on the provision of the machinery or plant of an amount equal to the disposal value brought into account by virtue of subsection (2) above.

4

In this section “open market value” has the same meaning as in section 76.

3

In section 81 of that Act (effect of bringing an asset into use for the purposes of a trade after it has been used for a purpose that does not attract capital allowances), after subsection (2) there shall be inserted—

2AA

Where—

a

a person is treated by virtue of subsection (1)(a) above as having incurred capital expenditure on the provision of machinery or plant, and

b

the sum which (apart from this subsection) would be taken to be the amount of that expenditure is more than the amount of capital expenditure actually incurred by that person on the provision of the machinery or plant,

the amount of the capital expenditure treated by virtue of subsection (1)(a) above as incurred on the provision of the machinery or plant shall be deemed (subject to subsection (2AB) below) to be equal to the amount actually so incurred by that person.

2AB

Where any of the amount of capital expenditure actually incurred on the provision of the machinery or plant by the person in question would have fallen by virtue of section 75, 76 or 76A to be disregarded for the purposes of sections 24, 25 and 26 had it been in consequence of that expenditure that the machinery or plant was provided for the purposes of a trade, the references in subsection (2AA) above to that amount shall be construed as references to only so much of that expenditure as would not have fallen to be so disregarded.

4

In Schedule 19AC to the Taxes Act 1988 (overseas life insurance companies), in paragraph 10B (modifications of section 440), after sub-paragraph (2) there shall be inserted—

2A

The following subsection shall be treated as inserted after subsection (4)—

4AA

Section 81 of the 1990 Act (as it has effect by virtue of section 83(2A) of that Act) shall apply in relation to any case in which an asset or part of an asset held by an overseas life insurance company—

a

ceases to be within the category set out in paragraph (h) of subsection (4) above; and

b

at the same time comes within another of the categories set out in that subsection.

5

In section 53 of the [1990 c. 1.] Capital Allowances Act 1990—

a

in subsection (1), paragraph (bb) (which, for the purposes of making allowances in respect of machinery or plant subject to equipment leasing, requires the equipment lessee to be within the charge to tax) shall cease to have effect; and

b

in subsection (1B)(b), for “paragraphs (bb) and” there shall be substituted “paragraph”.

6

In this section—

a

subsections (1), (4) and (5) have effect for chargeable periods ending on or after 21st March 2000;

b

subsection (2) has effect where the change of circumstances occurs on or after that date; and

c

subsection (3) has effect where the condition mentioned in section 81(1)(a) of that Act is fulfilled on or after that date.

76Production animals

1

Section 82 of the [1990 c. 1.] Capital Allowances Act 1990 (capital expenditure to which Part II does not apply) shall be renumbered as subsection (1) of that section; and after that provision as so renumbered there shall be inserted—

2

This Part shall not apply to capital expenditure—

a

on animals or other creatures to which Schedule 5 to the principal Act (treatment of farm animals etc for purposes of Case I of Schedule D) applies; or

b

on shares in such animals or creatures.

2

In paragraph 9(4) of Schedule 5 to the Taxes Act 1988 (treatment of farm animals etc for purposes of Case I of Schedule D), for the words from “in relation to animals” to the end there shall be substituted—

a

in relation to animals or other creatures kept singly as they apply in relation to herds; and

b

in relation to shares in animals or other creatures as they apply in relation to animals or other creatures themselves.

3

The enactments amended by subsections (1) and (2) above shall be deemed always to have had effect with the amendments made by those subsections.

77Sale and leaseback

1

After section 76A of the [1990 c. 1.] Capital Allowances Act 1990 insert—

76BSpecial provision for sale and leaseback cases

1

This section applies where—

a

subsection (1), (2) or (3) of section 75 applies by virtue of paragraph (b) (and not by virtue of paragraph (a) or (c)) of that subsection, or is treated (under one or both of sections 76(1) and 76A(1)) as so applying;

b

the conditions set out in subsection (2) below are fulfilled; and

c

the seller and the buyer elect that this section should apply.

2

The conditions are—

a

that the seller incurred capital expenditure on the provision of the machinery or plant;

b

that the machinery or plant was new at or after the time when it was acquired by the seller;

c

that the machinery or plant was acquired by the seller otherwise than as a result of a transaction to which section 75(1), (2) or (3) applies, or is treated (under one or both of sections 76(1) and 76A(1)) as applying;

d

that the sale is effected not more than four months after the first occasion on which the machinery or plant is brought into use by any person for any purpose;

e

that the seller has not—

i

made a claim for an allowance in respect of capital expenditure incurred on the provision of the machinery or plant;

ii

made a return in which such expenditure is taken into account in determining his qualifying expenditure for the purposes of section 24; or

iii

given notice of any such amendment of a return as provides for such expenditure to be so taken into account.

3

In a case where this section applies—

a

no allowance shall be made to the seller under this Act in respect of the capital expenditure incurred on the provision of the machinery or plant, or any additional VAT liability incurred in respect of it;

b

the whole amount of that expenditure, and any such liability, shall be left out of account in determining the amount for any period of the seller’s qualifying expenditure under section 25;

c

section 76(2) shall have effect as if paragraph (a) were omitted; and

d

section 76A shall have effect as if subsection (5) were omitted.

4

An election under this section shall be made by notice to an officer of the Board not more than two years after the time of the sale.

5

An election under this section shall be irrevocable once made; and nothing in—

a

section 42 of, or Schedule 1A to, the [1970 c. 9.] Taxes Management Act 1970 (claims and elections for income tax purposes); or

b

paragraphs 54 to 60 of Schedule 18 to the [1988 c. 36.] Finance Act 1998 (claims and elections for corporation tax purposes),

shall apply to such an election.

6

In this section, in a case where section 75(2) applies or is treated as applying, “the seller” means the owner of the machinery or plant, “the buyer” means the person entering into the contract and “the sale” means the making of the contract.

7

In this section, in a case where section 75(3) applies or is treated as applying—

a

the seller” means the assignor, “the buyer” means the assignee and “the sale” means the assignment; and

b

references to the machinery or plant being acquired by the seller shall be construed as references to the contract being entered into by the assignor.

8

In this section “return” means any return required to be made under the [1970 c. 9.] Taxes Management Act 1970 for income tax or corporation tax purposes.

2

In subsections (1), (2) and (3) of section 75 of that Act, after “76A” there shall be inserted “, 76B”.

78Meaning of “fixture”

1

Section 51 of the [1990 c. 1.] Capital Allowances Act 1990 (application and interpretation of Chapter VI: plant and machinery: fixtures) is amended as follows.

2

In subsection (1) for the words from the beginning to “other land” substitute—

1

This Chapter applies to determine entitlement to allowances under this Part in respect of expenditure on the provision of machinery or plant that is, or becomes, a fixture;

3

In subsection (2) (definitions), for the definition of “fixture” substitute—

“fixture”, subject to subsection (2A) below, means machinery or plant that is so installed or otherwise fixed in or to a building or other description of land as to become, in law, part of that building or other land;

4

After subsection (2), insert—

2A

In this Chapter—

fixture” includes any boiler, or water-filled radiator, installed in a building as part of a space or water heating system; and

relevant land”, in relation to such a fixture, means the building in which it is so installed.

5

For subsection (8) substitute—

8

Nothing in this Chapter affects the entitlement of any person to an allowance by virtue of section 154 (allowances in respect of contributions to capital expenditure).

6

The amendments in this section shall be deemed always to have had effect.

79Leased assets under the Affordable Warmth Programme

1

In section 53 of the [1990 c. 1.] Capital Allowances Act 1990 (fixtures: expenditure incurred by equipment lessor), after subsection (1C) insert—

1D

Where the conditions in subsection (1E) below are satisfied in any case, subsection (1) above shall have effect as if the following were omitted, that is to say—

a

in paragraph (b), the words from “for the purposes of” to “by the equipment lessee”, and

b

paragraphs (ba), (bb) and (d).

1E

Those conditions are—

a

that the machinery or plant consists of a boiler, heat exchanger, radiator or heating control that is installed in a building as part of a space or water heating system; and

b

that the agreement for the lease is approved for the purposes of this section as entered into as part of the Affordable Warmth Programme.

1F

The approval mentioned in subsection (1E)(b) above may be given, with the consent of the Treasury—

a

by the Secretary of State;

b

in the case of buildings in Scotland, by the Scottish Ministers;

c

in the case of buildings in Wales, by the National Assembly for Wales;

d

in the case of buildings in Northern Ireland, by the Department for Social Development in Northern Ireland.

1G

Where any such approval is withdrawn—

a

the approval shall be treated for the purposes of subsection (1E)(b) above as never having had effect, and

b

all such assessments and adjustments of assessments shall be made as are necessary in consequence of the withdrawal of the approval.

1H

Where a person who has made a return becomes aware that anything contained in the return has, after being made, become incorrect by reason of the withdrawal of any such approval, he shall, within three months of first becoming so aware, give notice to an officer of the Board of the amendments required to his return in consequence of the withdrawal of approval.

2

In the second column of the table in section 98 of the [1970 c. 9.] Taxes Management Act 1970 (penalty for failure to provide information etc.), in the entry relating to requirements imposed by provisions of the [1990 c. 1.] Capital Allowances Act 1990, for “and 51(6A)” substitute “51(6A) and 53(1H)”.

3

This section has effect in relation to expenditure incurred after the passing of this Act and before 1st January 2008.

80Fixtures and machinery and plant on hire-purchase etc

1

In section 60 of the [1990 c. 1.] Capital Allowances Act 1990 (machinery and plant on hire-purchase etc.), after subsection (3) insert—

4

This section has effect subject to section 60A below.

2

After that section insert—

60AMachinery and plant on hire-purchase etc.: fixtures

1

Section 60 does not—

a

apply to expenditure incurred on machinery or plant that is a fixture, or

b

prevent Chapter VI of this Part (fixtures) applying in relation to expenditure on machinery or plant incurred under such a contract as is mentioned in subsection (1) of that section.

2

If machinery or plant that is treated as belonging to a person under section 60 becomes a fixture, then, unless it is treated under Chapter VI of this Part as belonging to that person, it shall be treated for the purposes of this Part as ceasing to belong to him at the time when it becomes a fixture.

3

In this section “fixture” has the same meaning as in Chapter VI of this Part.

3

In section 60A of that Act (as inserted by subsection (2) above)—

a

subsection (1) shall be deemed always to have had effect, and

b

subsection (2) does not apply where the machinery or plant concerned became a fixture (within the meaning of that section) before the passing of this Act.

81Production sharing contracts

1

After section 64 of the [1990 c. 1.] Capital Allowances Act 1990 insert—

64AProduction sharing contracts

1

Subsection (2) below applies where—

a

a person (“the contractor”) is entitled to an interest in a contract made with, or with the authorised representative of, the government of a country or territory in which oil is or may be produced;

b

the contract provides (among other things) that any machinery or plant of a description specified in the contract which—

i

is provided by the contractor; and

ii

is used for qualifying purposes under the contract,

shall (whether immediately or at some later time) be transferred to the government or representative;

c

the contractor incurs capital expenditure on the provision of machinery or plant of a description so specified which, for the purposes of a trade of oil extraction carried on by him, is to be used for qualifying purposes under the contract;

d

the amount of that expenditure is commensurate with the value of the contractor’s interest under the contract; and

e

in accordance with the provision mentioned in paragraph (b) above, the machinery or plant is transferred to the government or representative.

2

The machinery or plant shall, notwithstanding the transfer and subject to subsection (6) below, be deemed for the purposes of this Part to belong to the contractor (and not to any other person) until such time as it—

a

ceases to belong to the government or representative; or

b

ceases to be used, or held for use, by any person under the contract.

3

Subsection (4) below applies where, in a case falling within subsection (1)(a) and (b) above—

a

a person (“the participator”) acquires an interest in the contract, whether from the contractor or from another person who has acquired it (directly or indirectly) from the contractor;

b

the participator incurs capital expenditure on the provision of machinery or plant which, for the purposes of a trade of oil extraction carried on by him, is to be used for qualifying purposes under the contract;

c

the amount of that expenditure is commensurate with the value of the participator’s interest under the contract; and

d

in accordance with the provision mentioned in subsection (1)(b) above, the machinery or plant is transferred to the government or representative.

4

The machinery or plant shall, notwithstanding the transfer and subject to subsection (6) below, be deemed for the purposes of this Part to belong to the participator (and not to any other person) until such time as it—

a

ceases to belong to the government or representative; or

b

ceases to be used, or held for use, by any person under the contract.

5

Subsections (6) to (9) below apply where, in a case falling within subsection (1)(a) and (b) above—

a

a person (“the participator”) acquires an interest in the contract, whether from the contractor or from another person who has acquired it (directly or indirectly) from the contractor; and

b

some of the expenditure incurred by the participator to acquire his interest in the contract is attributable to machinery or plant which—

i

is deemed by subsection (2) above to belong to the contractor; or

ii

is deemed by subsection (4) above or subsection (6) below to belong to another person (“the other participator”).

6

The machinery or plant shall, subject to any subsequent application of this subsection, be deemed for the purposes of this Part to belong to the participator (and not to any other person) until such time as it—

a

ceases to belong to the government or representative; or

b

ceases to be used, or held for use, by any person under the contract.

7

The contractor or, as the case may be, the other participator shall be deemed for the purposes of this Part to have disposed of the machinery or plant for a consideration equal to the expenditure attributable as mentioned in subsection (5)(b) above.

8

The participator shall be deemed for the purposes of this Part to have incurred, on the provision of the machinery or plant, capital expenditure of an amount which, subject to subsection (9) below, is equal to the expenditure so attributable.

9

There shall be disregarded for the purposes of this Part so much (if any) of the expenditure deemed to be incurred by the participator on the provision of the machinery or plant as exceeds any disposal value which falls to be brought into account by the contractor or, as the case may be, the other participator by reason of his deemed disposal of the machinery or plant.

10

In determining for the purposes of this Part the expenditure which is attributable as mentioned in subsection (5)(b) above, regard shall be had to what is just and reasonable in all the circumstances.

11

For the purposes of this section machinery or plant is used for qualifying purposes if it is used—

a

to explore for, win access to or extract oil;

b

for the initial storage or treatment of oil; or

c

for other purposes ancillary to the extraction of oil.

12

In this section “oil” has the same meaning as in section 196 of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992.

2

In section 26(1) of the [1990 c. 1.] Capital Allowances Act 1990 (disposal value), for the word “and” at the end of paragraph (ee) there shall be substituted—

ef

if that event is a deemed disposal of the machinery or plant which arises solely by virtue of subsection (2), (4) or (6) of section 64A and capital compensation is received by the contractor or participator (within the meaning of that subsection), equals the amount of that compensation;

eg

if that event is such a deemed disposal and no such compensation is so received, equals nil; and

3

This section has effect where the capital expenditure—

a

is incurred on or after 21st March 2000; or

b

is treated as incurred by virtue of section 81(1)(a) of the [1990 c. 1.] Capital Allowances Act 1990 and the condition mentioned in that provision is fulfilled on or after that date.

Tonnage tax

82Tonnage tax

Schedule 22 to this Act (tonnage tax) has effect.

Other relieving provisions

83Relief for interest on loans to buy annuities

1

In section 365(3) of the Taxes Act 1988 (loans to buy annuities)—

a

for the words “the qualifying maximum for the year of assessment”, in the first place where they occur, there shall be substituted the words “the sum of £30,000”; and

b

for those words, in the second place where they occur, there shall be substituted the words “that sum”.

2

In section 353(1G) of that Act (percentage of interest eligible for relief), for the words from “the percentage” to the end there shall be substituted “23 per cent.”.

3

In section 369(1A) of that Act (deductible percentage where interest payable under deduction of tax), for the words from “the percentage” to the end there shall be substituted “23 per cent.”.

4

This section has effect in relation to payments of interest made on or after 6th April 2000.

84Exemption of payments under New Deal 50plus

1

This section applies to—

a

the scheme under section 2(2) of the [1973 c. 50.] Employment and Training Act 1973 known as “New Deal 50plus”, and

b

the corresponding scheme under section 1 of the [1950 c. 29 (N.I.).] Employment and Training Act (Northern Ireland) 1950.

2

A payment to a person as a participant in the scheme by way of an employment credit or training grant under the scheme is exempt from income tax and, accordingly, shall be disregarded in computing the amount of any receipts brought into account for income tax purposes.

3

This section applies to any such payment made on or after 25th October 1999.

85Exemption of payments under Employment Zones programme

1

A payment to a person as a participant in an employment zone programme is exempt from income tax and, accordingly, shall be disregarded in computing the amount of any receipts brought into account for income tax purposes.

2

An “employment zone programme” means an employment zone programme established for an area or areas designated under section 60 of the [1999 c. 30.] Welfare Reform and Pensions Act 1999.

3

This section applies to any such payment made on or after 6th April 2000.

86Loan where return bears inverse relationship to results

1

In section 209 of the Taxes Act 1988 (meaning of “distribution”), after subsection (3A) insert—

3B

For the purposes of subsection (2)(e)(iii) above the consideration given by the company for the use of the principal secured shall not be treated as being to any extent dependent on the results of the company’s business or any part of it by reason only of the fact that the terms of the security provide—

a

for the consideration to be reduced in the event of the results improving, or

b

for the consideration to be increased in the event of the results deteriorating.

This subsection applies to payments made on or after 21st March 2000.

2

In Schedule 18 to the Taxes Act 1988 (group relief: equity holders and profits available for distribution), in paragraph 1(5E)—

a

in paragraph (a), after “improving” insert “, or for the rate of interest to be increased in the event of the results of the company’s business or any part of it deteriorating”; and

b

in paragraph (b), after “increasing” insert “, or for the rate of interest to be increased in the event of the value of any of the company’s assets diminishing”.

This subsection applies for the purposes of determining whether, at any time on or after 21st March 2000, a loan is a normal commercial loan for the purposes of paragraph 1(1)(b) of Schedule 18 to the Taxes Act 1988.

87Tax treatment of acquisition, disposal or revaluation of certain rights

Schedule 23 to this Act has effect with respect to the treatment of amounts relating to the acquisition, disposal or revaluation of—

a

licences granted under section 1 of the [1949 c. 54.] Wireless Telegraphy Act 1949 in accordance with regulations made under section 3 of the [1998 c. 6.] Wireless Telegraphy Act 1998 (bidding for licences),

b

indefeasible rights to use a telecommunications cable system, or

c

rights derived, directly or indirectly, from a right within paragraph (a) or (b).

88Contributions to local enterprise agencies, etc

In sections 79(11) and 79A(7) of the Taxes Act 1988 (relief for contributions to local enterprise agencies, business links and similar organisations: time limits), the words “and before 1st April 2000” shall cease to have effect.

89Waste disposal: entitlement of successor to allowances

In Chapter V of Part IV of the Taxes Act 1988 (provisions relating to the Schedule D charge: deductions), after section 91B (waste disposal: site preparation), insert—

91BAWaste disposal: entitlement of successor to allowances

1

This section applies where—

a

site preparation expenditure has been incurred in relation to a waste disposal site,

b

that expenditure was incurred by a person in the course of carrying on a trade, and

c

on or after 21st March 2000—

i

that person (“the predecessor”) ceases to carry on that trade, or ceases to carry it on so far as it relates to that site, and

ii

another person (“the successor”) begins to carry on that trade, or to carry on in the course of a trade the activities formerly carried on by the predecessor in relation to that site.

2

If the conditions specified in the following provisions of this section are met, then, for the purposes of section 91B above—

a

the trade carried on by the successor shall be treated as the same trade as that carried on by the predecessor, and

b

allowances shall be made to the successor (and not to the predecessor) as if everything done to or by the predecessor had been done to or by the successor.

3

The first condition is that the whole of the site in question is transferred to the successor.

Provided the successor holds an estate or interest in the whole of the site, it need not be the same as that held by the predecessor.

4

The second condition is that the successor, at the time he first deposits waste material at the site, holds a relevant licence in respect of the site which is then in force.

5

Expressions used in this section have the same meaning as in section 91B.

Capital gains tax: gifts and trusts

90Restriction of gifts relief

1

In section 165(1) of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (relief for gifts of business assets), in the closing words (which list the provisions restricting relief), for “sections 166 and 167” substitute “sections 166, 167 and 169”.

2

In section 260(1) of that Act (gifts on which inheritance tax is chargeable etc.), in the closing words (which list the provisions restricting relief), for “section 261” substitute “sections 169 and 261”.

3

In section 165(2)(b)(i) of, and paragraph 2(2)(b)(i) of Schedule 7 to, that Act (shares or securities in respect of which gifts relief may be claimed), for “neither listed on a recognised stock exchange nor dealt in on the Unlisted Securities Market” substitute “not listed on a recognised stock exchange”.

4

In section 165(3)(b) of that Act (disposals of shares or securities excepted from gifts relief), after “shares or securities,” insert “the transferee is a company or”.

5

This section has effect in relation to disposals made on or after 9th November 1999.

91Disposal of interest in settled property: deemed disposal of underlying assets

1

After section 76 of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992, insert—

76ADisposal of interest in settled property: deemed disposal of underlying assets

Schedule 4A to this Act has effect with respect to disposals for consideration of an interest in settled property.

2

After Schedule 4 to that Act insert the Schedule 4A set out in Schedule 24 to this Act.

3

This section applies to any disposal of an interest in settled property made, or the effective completion of which falls, on or after 21st March 2000.

Expressions used in this subsection have the same meaning as in Schedule 4A to the [1992 c. 12.] Taxation of Chargeable Gains Act 1992.

92Transfers of value by trustees linked with trustee borrowing

1

After section 76A of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (inserted by section 91(1) above), insert—

76BTransfers of value by trustees linked with trustee borrowing

Schedule 4B to this Act has effect with respect to transfers of value by trustees that are, in accordance with the Schedule, treated as linked with trustee borrowing.

2

After Schedule 4A to that Act (inserted by section 91(2) above), insert the Schedule 4B set out in Schedule 25 to this Act.

3

After section 85 of that Act, insert—

85ATransfers of value: attribution of gains to beneficiaries

Schedule 4C to this Act has effect with respect to the attribution to beneficiaries of gains accruing under Schedule 4B.

4

After Schedule 4B to the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (inserted by subsection (2) above), insert the Schedule 4C set out in Part I of Schedule 26 to this Act.

The consequential amendments in Part II of Schedule 26 to this Act have effect.

5

The provisions of this section have effect in relation to any transfer of value in relation to which the material time is on or after 21st March 2000.

The expressions “transfer of value” and “material time” have the same meaning in this subsection as in Schedule 4B to the [1992 c. 12.] Taxation of Chargeable Gains Act 1992.

93Restriction on set-off of trust losses

1

After section 79 of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992, insert—

79ARestriction on set-off of trust losses

1

This section applies to a chargeable gain accruing to the trustees of a settlement where—

a

in computing the gain, the allowable expenditure is reduced in consequence, directly or indirectly, of a claim to gifts relief in relation to an earlier disposal to the trustees;

b

the transferor on that earlier disposal, or any person connected with the transferor, has at any time—

i

acquired an interest in the settled property, or

ii

entered into an arrangement to acquire such an interest; and

c

in connection with that acquisition or arrangement any person has at any time received, or become entitled to receive, any consideration.

2

Where this section applies to a chargeable gain, no allowable losses accruing to the trustees (in the year in which the gain accrues or any earlier year) may be set against the gain.

This applies to the whole of the chargeable gain (and not just the element deferred as a result of the claim to gifts relief).

3

In this section—

a

gifts relief” means relief under section 165 or 260; and

b

references to losses not being allowed to be set against a chargeable gain are to the losses not being allowed as a deduction against chargeable gains to the extent that they include that gain.

4

The references in subsection (1)(b) above to an interest in settled property have the same meaning as in Schedule 4A.

2

This section applies to gains accruing on or after 21st March 2000.

94Attribution to trustees of gains of non-resident companies

1

After section 79A of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (inserted by section 93 above), insert—

79BAttribution to trustees of gains of non-resident companies

1

This section applies where trustees of a settlement are participators—

a

in a close company, or

b

in a company that is not resident in the United Kingdom but would be a close company if it were resident in the United Kingdom.

For this purpose “participator” has the same meaning as in section 13.

2

Where this section applies, nothing in any double taxation relief arrangements shall be read as preventing a charge to tax arising by virtue of the attribution to the trustees under section 13, by reason of their participation in the company mentioned in subsection (1) above, of any part of a chargeable gain accruing to a company that is not resident in the United Kingdom.

3

Where this section applies and—

a

a chargeable gain accrues to a company that is not resident in the United Kingdom but would be a close company if it were resident in the United Kingdom, and

b

all or part of the chargeable gain is treated under section 13(2) as accruing to a close company which is not chargeable to corporation tax in respect of the gain by reason of double taxation relief arrangements, and

c

had the company mentioned in paragraph (b) (and any other relevant company) not been resident in the United Kingdom, all or part of the chargeable gain would have been attributed to the trustees by reason of their participation in the company mentioned in subsection (1) above,

section 13(9) shall apply as if the company mentioned in paragraph (b) above (and any other relevant company) were not resident in the United Kingdom.

4

The references in subsection (3) above to “any other relevant company” are to any other company which if it were not resident in the United Kingdom would be a company in relation to which section 13(9) applied with the result that all or part of the chargeable gain was attributed to the trustees as mentioned in that subsection.

2

This section applies where a chargeable gain accrues on or after 21st March 2000 to a company that is not resident in the United Kingdom.

95Disposal of interest in non-resident settlement

1

Section 85 of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (disposal of interest in non-resident settlements) is amended as follows.

2

In subsection (2) (market value uplift for interest where trustees become non-resident) for “Subject to subsections (4) and (9) below,” substitute “Subject to subsections (4), (9) and (10) below,”.

3

In subsection (5) (market value uplift for interest where trustees become treaty non-resident), at the beginning insert “Subject to subsection (10) below,”.

4

After subsection (9) add—

10

Subsection (3) or (7) above does not apply to the disposal of an interest created by or arising under a settlement which has relevant offshore gains at the material time.

The material time is—

a

in relation to subsection (3) above, the relevant time within the meaning of section 80;

b

in relation to subsection (7) above, the time found under subsection (8) above.

11

For the purposes of subsection (10) above, a settlement has relevant offshore gains at any time if, were the year of assessment to end at that time, there would be an amount of trust gains which by virtue of section 89(2) or paragraph 8(3) of Schedule 4C would be available to be treated as chargeable gains accruing to any beneficiaries of the settlement receiving capital payments in the following year of assessment.

5

This section applies where the material time (within the meaning of section 85(10) of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992, inserted by subsection (4) above) falls on or after 21st March 2000.

96Payments by trustees to non-resident companies

1

In section 96(5) of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (capital payments by trustees to non-resident company), in the opening words (which refer to the persons by whom the company is controlled), omit “and each of them is then resident or ordinarily resident in the United Kingdom”.

2

This section applies to payments received on or after 21st March 2000.

Groups and group relief

97Group relief for non-resident companies etc

Schedule 27 to this Act has effect.

In that Schedule—

Part I makes amendments of Chapter IV of Part X of the Taxes Act 1988 (group relief), and

Part II contains consequential amendments.

98Recovery of tax payable by non-resident company

1

Schedule 28 to this Act has effect with respect to the recovery of unpaid corporation tax payable by a company not resident in the United Kingdom.

2

The provisions of that Schedule have effect in relation to corporation tax for accounting periods ending on or after 1st April 2000.

99Joint arrangements for claims

In paragraph 77 of Schedule 18 to the [1998 c. 36.] Finance Act 1998 (power to make provision by regulations about joint arrangements for group relief), in sub-paragraph (1)(a) (arrangements permitting claim for relief without copy of notice of consent to surrender), after “the surrendering company” insert “, provided authority for the claim being so made is given by a company which is authorised in relation to the claimant company as mentioned in paragraph (b)”.

100Limit on amount of group relief in case of consortium claim

1

For section 403C of the Taxes Act 1988 (special rules for consortium cases) substitute—

403CAmount of relief in consortium cases

1

In the case of a consortium claim the amount that may be set off against the total profits of the claimant company is limited by this section.

2

Where the claimant company is a member of the consortium, the amount that may be set off against the total profits of that company for the overlapping period is limited to the relevant fraction of the surrenderable amount.

That fraction is whichever is the lowest in that period of the following percentages—

a

the percentage of the ordinary share capital of the surrendering company that is beneficially owned by the claimant company;

b

the percentage to which the claimant company is beneficially entitled of any profits available for distribution to equity holders of the surrendering company; and

c

the percentage to which the claimant company would be beneficially entitled of any assets of the surrendering company available for distribution to its equity holders on a winding-up.

If any of those percentages have fluctuated in that period, the average percentage over the period shall be taken.

3

Where the surrendering company is a member of the consortium, the amount that may be set off against the total profits of the claimant company for the overlapping period is limited to the relevant fraction of the claimant company’s total profits for the overlapping period.

That fraction is whichever is the lowest in that period of the following percentages—

a

the percentage of the ordinary share capital of the claimant company that is beneficially owned by the surrendering company;

b

the percentage to which the surrendering company is beneficially entitled of any profits available for distribution to equity holders of the claimant company; and

c

the percentage to which the surrendering company would be beneficially entitled of any assets of the claimant company available for distribution to its equity holders on a winding-up.

If any of those percentages have fluctuated in that period, the average percentage over the period shall be taken.

4

In any case where the claimant or surrendering company is a subsidiary of a holding company which is owned by a consortium, for the references in subsection (2) or (3) above to the claimant or surrendering company there shall be substituted references to the holding company.

5

Expressions used in this section and in section 403A have the same meanings in this section as in that section.

6

Schedule 18 has effect for supplementing this section.

2

In section 406(6) of the Taxes Act 1988 (claims relating to losses etc. of consortium company or group member), for “accounting period in respect of which the member’s share in the consortium” substitute “overlapping period in respect of which the relevant fraction”.

3

The following provisions shall cease to have effect—

a

in section 402(4) of the Taxes Act 1988, the words from “if the share in the consortium” to “is nil or”; and

b

in section 413 of that Act, subsections (8) and (9).

4

In Schedule 18 to the Taxes Act 1988—

a

in paragraphs 1(1), 2(1), 3(1), 4(3) and (4), 5A(3) and (4), 5C(3) and (4), 5D(3) and (4), 5E(3) and (4) and 6, for “section 413(7) to (9)” substitute “sections 403C and 413(7)”; and

b

in paragraph 7(1)(b), for “subsection (8) of that section” substitute “section 403C”.

5

The amendments in this section shall be deemed always to have had effect.

101Notional transfers within groups of companies

1

After section 171 of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 insert—

171ANotional transfers within a group

1

This section applies where—

a

two companies (“A” and “B”) are members of a group of companies; and

b

A disposes of an asset to a person who is not a member of the group (“C”).

2

Subject to subsections (3) and (4) below, A and B may, by notice in writing to an officer of the Board, jointly elect that, for the purposes of corporation tax on chargeable gains—

a

the asset, or any part of it, shall be deemed to have been transferred by A to B immediately before the disposal to C;

b

section 171(1) shall be deemed to have applied to that transfer; and

c

the disposal of the asset or part to C shall be deemed to have been made by B.

3

No election may be made under subsection (2) above unless section 171(1) would have applied to an actual transfer of the asset or part from A to B.

4

An election under that subsection must be made before the second anniversary of the end of the accounting period of A in which the disposal to C was made.

5

Any payment by A to B, or by B to A, in pursuance of an agreement between them in connection with the election—

a

shall not be taken into account in computing profits or losses of either company for corporation tax purposes, and

b

shall not for any purposes of the Corporation Tax Acts be regarded as a distribution or a charge on income,

provided it does not exceed the amount of the chargeable gain or allowable loss that is treated, as a result of the disposal, as accruing to B.

2

This section has effect in relation to disposals made on or after 1st April 2000.

102Chargeable gains: non-resident companies and groups etc

Schedule 29 to this Act has effect.

In that Schedule—

Part I makes provision with respect to the application of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 to companies not resident in the United Kingdom and groups of companies etc,

Part II contains minor and consequential amendments, and

Part III contains transitional provisions.

International matters

103Double taxation relief

Schedule 30 to this Act (double taxation relief) shall have effect.

104Controlled foreign companies

Schedule 31 to this Act (which makes provision in relation to controlled foreign companies) shall have effect.

105Corporation tax: use of currencies other than sterling

1

For sections 92 to 95 of the [1993 c. 34.] Finance Act 1993 there shall be substituted—

92The basic rule: sterling to be used

1

Where a company carries on a business, the profits or losses of the business for an accounting period shall for the purposes of corporation tax be computed and expressed in sterling; but this is subject to section 93 below.

2

In this section—

losses” includes management expenses and any allowances falling to be made under section 28 or 61(1) of the [1990 c. 1.] Capital Allowances Act 1990;

profits” includes gains, income and any charges falling to be made under section 28 or 61(1) of that Act.

93Use of currency other than sterling

1

This section applies where in an accounting period a company carries on a business and either the first condition or the second condition is fulfilled.

2

The first condition is that—

a

the accounts of the company as a whole are prepared in a currency other than sterling in accordance with normal accounting practice; and

b

in the case of a company which is not resident in the United Kingdom, the company makes a return of accounts for its branch in the United Kingdom prepared in such a currency in accordance with such practice.

3

The second condition is that—

a

the accounts of the company as a whole are prepared in sterling but, so far as relating to the business, they are prepared, using the closing rate/net investment method, from financial statements prepared in a currency other than sterling; or

b

in the case of a company which is not resident in the United Kingdom, the company makes a return of accounts for its branch in the United Kingdom prepared in sterling but, so far as relating to the business, it is prepared, using that method, from financial statements prepared in such a currency.

4

The profits or losses of the business for an accounting period shall for the purposes of corporation tax be found by—

a

taking the amount of all the profits and losses of the business for the period computed and expressed in the relevant foreign currency;

b

taking account of any of the following which are so computed and expressed—

i

any management expenses brought forward under section 75(3) of the Taxes Act 1988 from an earlier accounting period;

ii

any losses of the business brought forward under section 392B or 393 of that Act from such a period; and

iii

any non-trading deficits on loan relationships brought forward under section 83 of the [1996 c. 8.] Finance Act 1996 from the previous accounting period; and

c

taking the sterling equivalent of the amount found by applying paragraphs (a) and (b) above.

5

In the application of section 22B, 34, 35, 38C, 38D or 79A of the [1990 c. 1.] Capital Allowances Act 1990 for the purposes of subsection (4)(a) or (b) above, it shall be assumed that any sterling amount mentioned in any of those sections is its equivalent expressed in the relevant foreign currency.

6

Where in an accounting period—

a

a company carries on different parts of a business through different branches (whether within or outside the United Kingdom); and

b

this section would apply differently in relation to different parts if they were separate businesses,

those parts shall be treated for the purposes of this section as if they were separate businesses for that period.

7

In this section, unless the context otherwise requires—

accounts”, in relation to a company, means—

a

the annual accounts of the company prepared in accordance with Part VII of the [1985 c. 6.] Companies Act 1985 or Part VIII of the [S.I. 1986/1032 (N.I.6).] Companies (Northern Ireland) Order 1986; or

b

if the company is not required to prepare such accounts, the accounts which it is required to keep under the law of its home State; or

c

if the company is not so required to keep accounts, such of its accounts as most closely correspond to accounts which it would have been required to prepare if the provisions of that Part applied to it;

branch” includes any collection of assets and liabilities;

the closing rate/net investment method” means the method so called as described under the title “Foreign currency translation” in the Statement of Standard Accounting Practice issued in April 1983 by the Institute of Chartered Accountants in England and Wales;

home State”, in relation to a company, means the country or territory under whose laws the company is incorporated;

losses” has the same meaning as in section 92 above except that it does not include allowable losses within the meaning of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992;

profits” has the same meaning as in section 92 above except that it does not include chargeable gains within the meaning of that Act;

the relevant foreign currency” means the currency other than sterling or, where the first condition is fulfilled and two different such currencies are involved, the currency in which the return of accounts is prepared;

return of accounts”, in relation to a branch in the United Kingdom, means a return of such accounts of the branch as may be required by the Inland Revenue under paragraph 3 of Schedule 18 to the Finance Act 1998 (company tax returns, assessments and related matters).

94Rules for ascertaining currency equivalents

1

Any receipt or expense which is to be taken into account in making a computation under subsection (1) of section 92 above for an accounting period, and is denominated in a currency other than sterling, shall be translated into its sterling equivalent—

a

if either of the conditions mentioned in subsection (2) below is fulfilled, by reference to the rate used in the preparation of the accounts of the company as a whole for that period;

b

if neither of those conditions is fulfilled, by reference to the London closing exchange rate for the relevant day.

2

The conditions are—

a

that the rate is an arm’s length exchange rate for the relevant day;

b

that the rate is an average arm’s length exchange rate for a period ending with that day, or for a period not exceeding three months which includes that day, and the arm’s length exchange rate for any day in that period (except the first) is not significantly different from that for the preceding day.

3

Subject to subsections (5) and (7) below, any amount found by applying paragraphs (a) and (b) of subsection (4) of section 93 above shall be translated into its sterling equivalent by reference to the London closing exchange rate for the relevant day.

4

The following—

a

any receipt or expense which is to be taken into account in making a calculation for the purposes of subsection (4)(a) or (b) of section 93 above, and is denominated in a currency other than the relevant foreign currency; and

b

any such sterling amount as is referred to in subsection (5) of that section,

shall be translated into its equivalent expressed in the relevant foreign currency by reference to the London closing exchange rate for the relevant day.

5

Where section 93 above applies by virtue of the first condition mentioned in that section, then, as regards the business or part of the business, the company—

a

may elect, by a notice given to an officer of the Board, that as from the first day of the accounting period in which the notice is given, an average arm’s length exchange rate shall be used for the purposes of subsection (3) above instead of the rate there mentioned; and

b

may withdraw such an election, by a notice so given, as from the first day of the first accounting period beginning on or after the date of the notice.

6

Where an election under subsection (5) above is withdrawn, no further election may be made under that subsection so as to take effect before the third anniversary of the day on which the withdrawal takes effect.

7

Where—

a

section 93 above applies by virtue of the second condition mentioned in that section; and

b

the accounts of the company, so far as relating to the business or part of the business, are prepared by reference to an average arm’s length exchange rate,

that exchange rate shall be used for the purposes of subsection (3) above instead of the rate there mentioned.

8

In this section—

accounts” has the same meaning as in section 93 above;

arm’s length exchange rate” means such exchange rate as might reasonably be expected to be agreed between persons dealing at arm’s length;

average arm’s length exchange rate”, in relation to a period, means the rate which represents an appropriate average of arm’s length exchange rates for the period;

the relevant day” means—

a

for the purposes of subsections (1), (2) and (4)(a) above, the day on which the company becomes entitled to the receipt or incurs (or is treated as incurring) the expense;

b

for the purposes of subsection (3) above, the last day of the accounting period in question;

c

for the purposes of subsection (4)(b) above, the day on which the company incurs the capital expenditure.

9

Nothing in this section affects the operation of Chapter IV of Part VII of the Taxes Act 1988 (controlled foreign companies) or Chapter II of this Part.

10

Nothing in paragraph 88 of Schedule 18 to the [1998 c. 36.] Finance Act 1998 (company tax returns, assessments and related matters) shall be taken to prevent any amount which is taken to be conclusively determined for the purposes of the Corporation Tax Acts from being translated under this section by reference to an exchange rate which was not used to determine the amount which can no longer be altered.

2

Where any of the items referred to in section 93(4)(b) of the [1993 c. 34.] Finance Act 1993 (as substituted by subsection (1) above) fall to be taken into account in the first accounting period in relation to which this section has effect, the amounts of those items shall be computed and expressed in the relevant currency by reference to the London closing exchange rate for the last day of the immediately preceding accounting period.

3

Where any of the items referred to in section 25(1) of the [1990 c. 1.] Capital Allowances Act 1990 which fall to be taken into account for the first accounting period in relation to which this section has effect relate to expenditure which was incurred before the beginning of that period, the amounts of those items shall be computed and expressed in the relevant currency by reference to the London closing exchange rate for the last day of the immediately preceding accounting period.

4

Subject to subsection (5) below, this section has effect for accounting periods beginning on or after 1st January 2000 and ending on or after 21st March 2000.

5

Any company which did not, for the accounting period immediately preceding the first accounting period falling within subsection (4) above, make an election in respect of a trade or part of a trade under the Local Currency Elections Regulations 1994 may, by notice given to an officer of the Board on or before 31st August 2000, elect that this section shall not have effect in relation to it until the first accounting period beginning on or after 1st July 2000.

106Foreign exchange gains and losses: use of local currency

1

In subsection (2) of section 149 of the [1993 c. 34.] Finance Act 1993 (local currency to be used)—

a

for “trade or trades”, in both places where they occur, there shall be substituted “business or businesses”; and

b

for “any such trade” there shall be substituted “any such business”.

2

In subsection (4) of that section—

a

the words “the asset or contract was held, or the liability was owed, by the company solely for trading purposes and” shall cease to have effect; and

b

for “sections 125 to 128” there shall be substituted “sections 125 to 129”.

3

In subsection (5) of that section—

a

the words “the asset or contract was held, or the liability was owed, by the company solely for trading purposes and” shall cease to have effect;

b

for “sections 125 to 128” there shall be substituted “sections 125 to 129”; and

c

for “trade”, in both places where it occurs, there shall be substituted “business”.

4

For subsection (6) of that section there shall be substituted—

6

In any other case—

a

sections 125 to 129 above shall be applied by reference to sterling;

b

those sections shall then be applied separately by reference to each local currency involved (other than sterling); and

c

any exchange gain or loss of a business or part shall be ignored unless found in the currency which is the local currency of the business or part for the relevant accounting period (whether sterling or otherwise).

5

For subsection (7) of that section there shall be substituted—

7

For the purposes of this section a part of a business is any part of a business which is treated for the purposes of section 93 above as if it were a separate business for the relevant accounting period.

6

For subsection (9) of section 128 of the [1993 c. 34.] Finance Act 1993 (trading gains and losses) there shall be substituted—

9

For the purposes of this section a part of a trade is any part of a trade which is treated for the purposes of section 93 above as if it were a separate business for the relevant accounting period; and the relevant accounting period is the accounting period which constitutes the accrual period concerned or in which that accrual period falls.

7

After section 135 of that Act there shall be inserted—

135ASterling used if avoidance of gain is the main benefit

1

This section applies where, as regards qualifying assets and liabilities of a company—

a

a currency other than sterling would (apart from this section) be the local currency for the purposes of sections 125 to 129 above; and

b

the main benefit that might be expected to accrue from that currency being the local currency is that no net exchange gain would accrue to the company for those purposes.

2

If a net exchange gain would accrue to the company if sterling were the local currency for the purposes of sections 125 to 129 above, then, as regards the assets and liabilities concerned, sterling shall be the local currency for those purposes.

3

For the purposes of this section a net exchange gain accrues to a company if its initial exchange gains (as determined in accordance with this Chapter) exceed its initial exchange losses (as so determined).

8

For subsection (12) of section 140 of that Act (deferral of unrealised gains) there shall be substituted—

12

For the purposes of this section a part of a trade is any part of a trade which is treated for the purposes of section 93 above as if it were a separate business for the relevant accounting period; and the relevant accounting period is the accounting period which constitutes the second accrual period or in which that accrual period falls.

9

For subsection (2) of section 142 of that Act (deferral non-sterling trades) there shall be substituted—

2

For the purposes of subsection (1) above the sterling equivalent of an amount is the sterling equivalent calculated by reference to such rate of exchange as applies by virtue of section 94 above in the case of the profits or losses for the accounting period concerned of the business or part of which the gain or loss is a gain or loss (or would be apart from section 139 above).

10

In subsections (3) and (5) of that section, for “trade”, in each place where it occurs, there shall be substituted “business”.

11

For subsection (4) of that section there shall be substituted—

4

The amount the company is treated as receiving under section 128(4) or 129(2) above in respect of the accounting period and by virtue of the gain (as reduced) shall be the amount computed and expressed in that currency.

12

In subsection (1) of section 163 of that Act (local currency of a trade), for “trade” there shall be substituted “business”.

13

For subsections (2) and (3) of that section there shall be substituted—

2

Where by virtue of section 93 above the profits or losses of a business or part of a business for an accounting period are to be computed and expressed in a currency other than sterling for the purposes of corporation tax, that other currency is the local currency of the business or part for that period.

14

In section 164 of that Act (interpretation: miscellaneous), subsections (6) and (7) shall cease to have effect.

15

In section 167 of that Act (orders and regulations)—

a

in subsection (5A), for “the provisions of Chapter II of Part IV of the [1996 c. 8.] Finance Act 1996 (loan relationships)” there shall be substituted—

a

the provisions of Chapter II of Part IV of the [1996 c. 8.] Finance Act 1996 (loan relationships); or

b

the provisions of sections 105 and 106 of the Finance Act 2000 (use of local currency).

b

in subsection (5B), for “subsection (5A)” there shall be substituted “subsection (5A)(a)”; and

c

after that subsection there shall be inserted—

5C

The power to make any such modifications as are mentioned in subsection (5A)(b) above shall be exercisable so as to apply those modifications in relation to any accounting period of a company beginning on or after 1st January 2000.

16

In subsection (4)(b) of section 110 of the [1998 c. 36.] Finance Act 1998 (determinations requiring the sanction of the Board), after “section 135,” there shall be inserted “135A,”.

17

This section has effect for accounting periods beginning on or after 1st January 2000 and ending on or after 21st March 2000.

Insurance

107General insurance reserves

1

Where an amount representing the whole or any part of the technical provisions which are made by a general insurer for a period of account is taken into account in computing for tax purposes the profits of his trade for that period—

a

subsection (2) below applies if it becomes apparent in a later period of account that the amount taken into account was excessive; and

b

subsection (3) below applies if it becomes apparent in such a period that that amount was insufficient.

2

For the purpose of making good to the Exchequer the loss occasioned by the excess, an amount calculated by applying, for a prescribed period, a prescribed rate of interest to the amount of the excess shall be treated as a receipt of the general insurer’s trade in computing for tax purposes the profits of that trade for the later period of account.

3

For the purpose of making good to the general insurer the loss occasioned by the deficiency, an amount calculated by applying, for a prescribed period, a prescribed rate of interest to the amount of the deficiency shall be treated as an expense of the general insurer’s trade in computing for tax purposes the profits of that trade for the later period of account.

4

A general insurer may, before the end of a prescribed period, elect that any part of the technical provisions made by him for a period of account shall not be taken into account in computing for tax purposes the profits of his trade for that period; and where he does so, the profits of his trade for the next period of account shall be adjusted accordingly for the purposes of any computation for tax purposes.

5

The Board may by regulations make provision for giving effect to subsections (1) to (4) above.

6

The regulations may, in particular—

a

exclude from the operation of subsections (1) to (4) above such descriptions of general insurer as may be prescribed;

b

make such provision as appears to the Board to be appropriate for determining for the purposes of subsections (1) to (3) above whether any amount taken into account was excessive or insufficient and, if so, the amount of the excess or deficiency, including—

i

provision requiring discounting at a prescribed rate; and

ii

provision allowing a prescribed margin for error;

c

make provision for applying subsections (1) to (3) above, to such extent and with such modifications as appear to the Board to be appropriate, to cases where it becomes apparent—

i

that any amount taken into account was or has become insufficient; or

ii

that any amount treated as a receipt or expense of a trade was excessive;

d

make such provision as appears to the Board to be appropriate for dealing with cases where a general insurer transfers his general business to, or enters into a qualifying contract with, another person; and

e

in the event of any changes in the rules or practice of Lloyd’s, make such amendments of this section as appear to the Board to be expedient having regard to those changes.

7

In this section—

closing year”, in relation to a syndicate, has the same meaning as in Chapter III of Part II of the [1993 c. 34.] Finance Act 1993 or Chapter V of Part IV of the [1994 c. 9.] Finance Act 1994;

general business” has the same meaning as in the [1982 c. 50.] Insurance Companies Act 1982;

general insurer” means any of the following which carries on general business—

a

a company to which Part II of the [1982 c. 50.] Insurance Companies Act 1982 applies;

b

an EC company (within the meaning of section 6(2) of that Act) which carries on general business through a branch or agency in the United Kingdom;

c

a controlled foreign company within the meaning of Chapter IV of Part XVII of the Taxes Act 1988; and

d

an underwriting member of Lloyd’s (“an underwriting member”);

“period of account”—

a

except in relation to an underwriting member, means a period for which an account is made up;

b

in relation to such a member, means an underwriting year in which profits or losses are declared for an earlier underwriting year;

prescribed” means prescribed by regulations under this section;

qualifying contract”, in relation to a general insurer, means a contract for reinsuring the liabilities to which any technical provisions of his relate;

reinsurance to close contract” means a contract where, in accordance with the rules or practice of Lloyd’s and in consideration of the payment of a premium, one underwriting member agrees with another to meet liabilities arising from the latter’s underwriting business for an underwriting year so that the accounts of the business for that year may be closed;

syndicate” means a syndicate of underwriting members of Lloyd’s formed for an underwriting year;

“technical provisions”, except in relation to an underwriting member, means any of the following—

a

provisions for claims outstanding;

b

provisions for unearned premiums;

c

provisions for unexpired risks;

and in this definition expressions which are used in Schedule 9A to the [1985 c. 6.] Companies Act 1985 have the same meanings as in that Schedule;

technical provisions”, in relation to an underwriting member, means—

a

so much of the premiums paid, or treated (in accordance with the rules or practice of Lloyd’s) as paid, by him under reinsurance to close contracts; and

b

so much of any provisions made for the unpaid liabilities of an open syndicate of which he is a member,

as may be determined by or under regulations made by the Board;

underwriting year” means the calendar year;

and for the purposes of this section a syndicate is an open syndicate at any time after the end of its closing year if, at that time, the accounts of its business for the underwriting year for which it was formed have not been closed.

8

Regulations under this section may—

a

make different provision for different cases or descriptions of case, including different provision for different entitlements to participate in the general business carried on by syndicates; and

b

make such supplementary, incidental, consequential and transitional provision as appears to the Board to be appropriate.

9

An amount which under subsection (2) or (3) above is treated as a receipt or expense of an underwriting member’s trade—

a

shall not be included in the aggregate amount mentioned in paragraph 1 of Schedule 19 to the [1993 c. 34.] Finance Act 1993; but

b

shall be regarded as arising directly from his membership of one or more syndicates for the purposes of section 172(1)(a) of the Finance Act 1993 or section 220(2)(a) of the [1994 c. 9.] Finance Act 1994.

10

Nothing in paragraph 7 of Schedule 19 to the Finance Act 1993 shall be taken to affect the operation of subsection (2) or (3) above or the exercise of the power conferred by subsection (4) above.

11

Section 177 of the [1993 c. 34.] Finance Act 1993 and section 224 of the [1994 c. 9.] Finance Act 1994 (which are superseded by this section) shall cease to have effect.

12

In this section—

a

subsections (1) to (3), subsections (5) to (8) and (10) so far as relating to those subsections and subsection (9) have effect where—

i

the first period of account mentioned in subsection (1) begins on or after 1st January 2000; and

ii

the later period of account mentioned in that subsection begins on or after 1st January 2001;

b

subsection (4), and subsections (5) to (8) and (10) so far as relating to that subsection, have effect in relation to periods of account beginning on or after 1st January 2000;

c

subsection (11) has effect in relation to profits of underwriting members’ trades which are declared in periods of account beginning on or after that date.

108Overseas life assurance business

1

In subsection (1) of section 431D of the Taxes Act 1988 (meaning of “overseas life assurance business”), for “or life reinsurance business” there shall be substituted “, life reinsurance business or business of any description excluded from this section by regulations made by the Board”.

2

For subsections (2) to (8) of that section there shall be substituted—

2

Regulations under subsection (1) above may describe the excluded business by reference to any circumstances appearing to the Board to be relevant.

3

The Board may by regulations—

a

make provision as to the circumstances in which a trustee who is a policy holder or annuitant residing in the United Kingdom is to be treated for the purposes of this section as not so residing; and

b

provide that nothing in Chapter II of Part XIII shall apply to a policy or contract which constitutes overseas life assurance business by virtue of any such provision as is mentioned in paragraph (a) above.

4

Regulations under subsection (1) or (3) above may contain such supplementary, incidental, consequential or transitional provision as appears to the Board to be appropriate.

3

Where the policy or contract for any life assurance business was made before such day as the Treasury may by order appoint, the amendments made by this section (and any regulations made under them) shall not have effect for determining whether the business is overseas life assurance business.

109Insurance business: apportionment rules

1

In subsection (4)(b) of section 432ZA of the Taxes Act 1988 (linked assets), for the words from “the proportion which” to the end there shall be substituted—

the proportion A/B where—

A is the total of the linked liabilities of the company which are liabilities of the internal linked fund in which the asset is held and are referable to that category of business;

B is the total of the linked liabilities of the company which are liabilities of that fund.

2

For subsection (6) of that section there shall be substituted—

6

In this section—

internal linked fund”, in relation to an insurance company, means an account—

a

to which linked assets are appropriated by the company; and

b

which may be divided into units the value of which is determined by the company by reference to the value of those assets;

linked liabilities” means liabilities in respect of benefits to be determined by reference to the value of linked assets.

3

In the subsections mentioned in subsection (4) below—

a

in paragraph (a), after “reduced” there shall be inserted “(but not below nil)” and for “values” there shall be substituted “net values”; and

b

for paragraph (b) there shall be substituted—

b

the denominator is the aggregate of—

i

the numerator given by paragraph (a) above; and

ii

the numerators given by that paragraph in relation to the other categories of business.

4

The subsections are—

a

subsection (6) of section 432A of the Taxes Act 1988 (apportionment of income and gains);

b

subsection (4) of section 432C of that Act (section 432B apportionment: income of non-participating funds); and

c

subsection (3) of section 432D of that Act (section 432B apportionment: value of non-participating funds).

5

For subsection (8) of section 432A there shall be substituted—

8

In subsection (6) above “appropriate part”, in relation to the investment reserve, means—

a

where none (or none but an insignificant proportion) of the liabilities of the long term business are with-profits liabilities, the part of that reserve which bears to the whole the proportion A/B where—

A is the amount of the liabilities of the category of business in question;

B is the whole amount of the liabilities of the long term business; and

b

in any other case, the part of that reserve which bears to the whole the proportion C/D where—

C is the amount of the with-profits liabilities of the category of business in question;

D is the whole amount of the with-profits liabilities of the long term business.

6

After subsection (9) of that section there shall be inserted—

9A

In this section and sections 432C and 432D “net value”, in relation to any assets, means the excess of the value of the assets over any liabilities which—

a

represent a money debt; and

b

are liabilities of an internal linked fund in which the assets are held;

and in this subsection “internal linked fund” has the same meaning as in section 432ZA.

9B

In this section—

investment reserve”, in relation to an insurance company, means the excess of the value of the assets of the company’s long term business over the aggregate of—

a

the liabilities of that business; and

b

any liabilities of the long term business fund which represent a money debt;

money debt” has the same meaning as in Chapter II of Part IV of the [1996 c. 8.] Finance Act 1996.

7

In subsection (5)(b) of section 432C, after “subsection (1)” there shall be inserted “or (2)”.

8

In Schedule 11 to the [1996 c. 8.] Finance Act 1996 (loan relationships: special provisions for insurers), after paragraph 3 there shall be inserted—

3A

1

This paragraph applies where—

a

any money debt of an insurance company is represented by a liability which is a liability of the long term business fund of the company; and

b

any question arises for the purposes of the Corporation Tax Acts as to the extent to which any debits or credits given for the purposes of this Chapter in respect of that debt or liability are referable to any category of the company’s long term business.

2

If any debits relate to interest payable in respect of the late payment of any benefits, they are referable to the category of long term business which comprises the effecting and carrying out of the policies or contracts under which the benefits are payable.

3

If the liability is a liability of an internal linked fund of the company, any debits or credits are referable—

a

to the category of long term business to which the fund relates; or

b

where the fund relates to two or more categories of such business, to those categories in the same proportion as the linked assets in the fund are apportioned to them under section 432ZA(4) of the Taxes Act 1988 (linked assets).

4

In any case not falling within sub-paragraph (2) or (3) above, there shall be referable to any category of long term business the relevant fraction of any debits or credits.

5

For the purpose of determining that fraction, subsections (6) and (8) of section 432A of the Taxes Act 1988 (apportionment of income and gains) shall have effect as if—

a

the debits or credits were income not directly referable to any category of business;

b

the reference in subsection (6)(a) to assets directly referable to a category of business were a reference to assets linked to that category of business; and

c

subsection (9) of that section were omitted.

6

In this paragraph “internal linked fund” has the same meaning as in section 432ZA of the Taxes Act 1988 (linked assets).

9

In consequence of the preceding provisions of this section—

a

in section 431(2) of the Taxes Act 1988 (interpretative provisions in relation to insurance companies), the definition of “investment reserve” shall cease to have effect;

b

in paragraph 4(2) of Schedule 19AA to that Act (overseas life assurance fund), after “investment reserve” there shall be inserted “(within the meaning of section 432A)”; and

c

in paragraph 7(3) of Schedule 19AC to that Act (modification of Act in relation to overseas life insurance companies)—

i

in paragraph (b), for “value” there shall be substituted “net value”; and

ii

paragraph (c) shall cease to have effect.

10

This section shall have effect in relation to accounting periods beginning on or after 1st January 2000 and ending on or after 21st March 2000.

Miscellaneous

110Rent factoring

1

At the end of Part II of the Taxes Act 1988 (provisions relating to the Schedule A charge) insert—

Rent factoring

43AFinance agreement: interpretation

1

A transaction is a finance agreement for the purposes of sections 43B to 43F if in accordance with normal accounting practice the accounts of a company which receives money under the transaction would record a financial obligation (whether in respect of a lease creditor or otherwise) in relation to that receipt.

2

In subsection (1) “normal accounting practice” in relation to a company means normal accounting practice for a company incorporated in a part of the United Kingdom (irrespective of where the company is in fact incorporated).

3

The reference to a company’s accounts in subsection (1) shall be taken to include a reference to the consolidated group accounts of a group of companies of which it is a member; and—

a

group of companies” means a set of companies which, if each were incorporated in Great Britain, would form a group within the meaning given by section 262(1) of the [1985 c. 6.] Companies Act 1985, and

b

consolidated group accounts” means accounts of a kind which would satisfy the requirements of section 227 of the Companies Act 1985.

4

For the purposes of subsection (1) a company shall be treated as receiving any money which—

a

falls to be taken into account as a receipt for the purpose of calculating the company’s liability to corporation tax, or

b

would fall to be taken into account as a receipt for that purpose if the company were resident in the United Kingdom.

43BTransfer of rent

1

This section applies to a finance agreement if it transfers a right to receive rent in respect of land in the United Kingdom from one person to another, otherwise than by means of the grant of a lease of land in the United Kingdom.

2

A person who receives a finance amount shall be treated for the purposes of the Tax Acts as receiving it—

a

by way of rent,

b

in the course of a business falling within paragraph 1(1) of Schedule A, and

c

in the chargeable period in which the agreement is made;

and the finance amount shall be taken into account in computing the profits of the Schedule A business for the chargeable period in which the agreement is made.

3

In subsection (2) “finance amount” means a receipt in respect of which section 43A(1) is satisfied.

43CTransfer of rent: exceptions, &c

1

Section 43B shall not apply to a finance agreement if the term over which the financial obligation is to be reduced exceeds 15 years.

2

Section 43B shall not apply to a finance agreement if—

a

the arrangements for the reduction of the financial obligation substantially depend on a person’s entitlement to an allowance under the Capital Allowances Acts, and

b

that person is not connected to the person from whom the right to receive rent is transferred.

3

Section 43B shall not apply to a finance agreement if—

a

section 36(1) applies (without reference to section 36(3)), or

b

section 36(1) would apply (without reference to section 36(3)) if the price at which an estate or interest is sold were to exceed the price at which it is to be reconveyed.

4

If—

a

section 36(1) would apply in relation to a finance agreement by virtue only of section 36(3), and

b

section 43B applies in relation to the agreement,

section 36(1) shall not apply.

5

Section 43B shall not apply to a finance agreement if section 780 applies.

6

Section 43B(2) shall not apply to a finance amount which is brought into account in computing the profits of a trade for the purposes of Case I of Schedule D (otherwise than by virtue of section 83 of the [1989 c. 26.] Finance Act 1989 (life assurance)).

43DInterposed lease

1

This section applies to a finance agreement under which—

a

a lease is granted in respect of land in the United Kingdom,

b

a premium is payable in respect of the lease, and

c

section 43A(1) is satisfied by reference to the receipt of the premium.

2

Where this section applies, the person to whom the premium is payable shall be treated for the purposes of the Tax Acts as receiving it—

a

by way of rent,

b

in the course of a business falling within paragraph 1(1) of Schedule A, and

c

in the chargeable period in which the agreement is made;

and the premium shall be taken into account in computing the profits of the Schedule A business for the chargeable period in which the agreement is made.

43EInterposed lease: exceptions, &c

1

Section 43D shall not apply to a finance agreement if—

a

the term over which the financial obligation is to be reduced exceeds 15 years, or

b

the length of the lease does not exceed 15 years, or

c

the length of the lease is not significantly different from the term over which the financial obligation is to be reduced.

2

For the purpose of subsection (1) the length of a lease shall be calculated in accordance with section 38.

3

Section 43D shall not apply to a finance agreement if—

a

the arrangements for the reduction of the financial obligation substantially depend on a person’s entitlement to an allowance under the Capital Allowances Acts, and

b

that person is not connected to the person who grants the lease in respect of which the premium is payable.

4

Section 43D(2) shall not apply where all or part of the premium is brought into account in computing the profits of a trade for the purposes of Case I of Schedule D (otherwise than by virtue of section 83 of the [1989 c. 26.] Finance Act 1989 (life assurance)).

5

Section 34 shall not apply in relation to a premium to which section 43D(2) applies.

43FInsurance business

1

In the application of sections 43A to 43E to companies carrying on insurance business a reference to accounts does not include a reference to accounts required to be prepared under Part II of the [1982 c. 50.] Insurance Companies Act 1982.

2

Neither section 43B(2) nor section 43D(2) shall require any amount to be brought into account in a computation of profits of life assurance business, or any category of life assurance business, carried on by a company where the computation is made in accordance with the provisions of this Act applicable to Case I of Schedule D.

3

Section 432A shall have effect in relation to any sum which is or would be treated as received by virtue of section 43B(2) or 43D(2) of this Act.

4

Expressions used in this section and in Chapter I of Part XII have the same meaning in this section as in that Chapter.

43GInterpretation

1

This section applies for the purposes of sections 43A to 43F.

2

In those sections—

connected” in relation to persons has the meaning given by section 839,

rent” includes any sum which is chargeable to tax under Schedule A,

lease” includes an underlease, sublease, tenancy or licence and an agreement for any of those things, but does not include a mortgage or heritable security,

premium” has the meaning given by section 24(1) (and, in relation to Scotland, section 24(5)), and subsections (4) and (5) of section 34 shall have effect in relation to sections 43A to 43F as they have effect in relation to section 34, and

sum” has the meaning given by section 24(4).

3

A reference to a transfer of a right to receive rent from one person to another includes a reference to any arrangement under which rent ceases to form part of the receipts taken into account for the purposes of calculating a company’s liability to corporation tax or income tax.

4

In calculating the term over which a financial obligation is to be reduced no account shall be taken of any period during which the arrangements for reduction differ from the arrangements which apply in a previous period if—

a

the period begins after the financial obligation has been substantially reduced, and

b

the different arrangements for reduction are not the result of a provision for periodic review, on commercial terms, of rent under a lease.

2

The provisions inserted by subsection (1) have effect in relation to transactions entered into on or after 21st March 2000.

111Payments under deduction of tax

1

Chapter VIIA of Part IV of the Taxes Act 1988 (paying and collecting agents) shall cease to have effect.

2

In section 349 of the Taxes Act 1988 (payments under deduction of tax)—

a

in subsections (3)(c) and (3B) (payments excepted from deduction of tax), for “payment to which section 124 applies” substitute “payment of interest on a quoted Eurobond”; and

b

in subsection (4), after the definition of “qualifying deposit right” insert—

quoted Eurobond” means any security that—

i

is issued by a company,

ii

is listed on a recognised stock exchange, and

iii

carries a right to interest;

and accordingly section 124 of that Act (interest on quoted Eurobonds) shall cease to have effect.

3

In section 482 of the Taxes Act 1988 (supplementary provisions with respect to deposit-takers etc)—

a

after subsection (2) insert—

2A

A declaration under section 481(5)(k)(i) must contain—

a

in a case falling within section 481(4)(a), the name and principal residential address of the individual who is beneficially entitled to the interest or, where two or more individuals are so entitled, of each of them;

b

in a case falling within section 481(4)(b), the name and principal residential address of each of the partners.

b

subsection (11)(a) shall cease to have effect.

4

In section 477A of the Taxes Act 1988 (building societies: regulations for deduction of tax), after subsection (2) insert—

2A

Without prejudice to the generality of subsection (2)(a) above, regulations under subsection (1) above may make provision with respect to the furnishing of information to or by building societies corresponding to any provision that is made by, or may be made under, section 482 with respect to the furnishing of information to or by deposit-takers.

5

In section 37(11) of the [1997 c. 58.] Finance (No.2) Act 1997 (interest to be paid gross), for “Sections 50 and 118D(4)” substitute “Section 50”.

6

In this section—

a

subsections (1) and (5) apply to relevant payments or receipts in relation to which the chargeable date for the purposes of Chapter VIIA of Part IV is on or after 1st April 2001;

b

subsection (2) applies in relation to payments of interest made on or after that date;

c

subsection (3) applies in relation to declarations under section 481(5)(k)(i) of the Taxes Act 1988 made on or after 6th April 2001.

112UK public revenue dividends: deduction of tax

1

In subsection (A1) of section 50 of the Taxes Act 1988 (Treasury directions for payment of public revenue dividends without deduction of tax), for “registered gilt-edged securities” substitute “gilt-edged securities”.

2

After subsection (3B) of section 349 of that Act (payments not out of profits or gains brought into charge to income tax, and annual interest) insert—

3C

Subject to any provision to the contrary in the Income Tax Acts, where any UK public revenue dividend is paid, the person by or through whom the payment is made shall, on making the payment, deduct out of it a sum representing the amount of income tax on it for the year in which the payment is made.

3

At the end of subsection (4) of that section insert—

UK public revenue dividend” means any income from securities which is paid out of the public revenue of the United Kingdom or Northern Ireland, but does not include interest on local authority stock.

4

After section 350 of that Act insert—

350AUK public revenue dividends: deduction of tax

1

The Board may by regulations—

a

make provision as to the time and manner in which persons who under section 349(3C) deduct sums representing income tax out of payments of UK public revenue dividends are to account for and pay those sums; and

b

otherwise modify the provisions of sections 349 and 350 in their application to such dividends;

and in this section “UK public revenue dividend” has the same meaning as in section 349.

2

Regulations under this section may—

a

make different provision for different descriptions of UK public revenue dividend and for different circumstances;

b

make special provision for UK public revenue dividends which—

i

are payable to the Bank of Ireland out of the public revenue of the United Kingdom, or

ii

are entrusted to the Bank of Ireland for payment and distribution and are not payable by that Bank out of its principal office in Belfast;

c

include such transitional and other supplementary provisions as appear to the Board to be necessary or expedient.

3

No regulations under this section shall be made unless a draft of them has been laid before and approved by a resolution of the House of Commons.

5

This section applies to payments made on or after 1st April 2001.

113Tax treatment of expenditure on production or acquisition of films

1

In section 68 of the of the [1990 c. 1.] Capital Allowances Act 1990 (expenditure relating to films, tapes and discs), for subsection (1) substitute—

1

Expenditure incurred on the production or acquisition of a film, tape or disc shall be regarded for the purposes of the Tax Acts as expenditure of a revenue nature, subject to any election under subsection (9) below.

2

For subsection (2) of that section substitute—

2

In this section any reference to a film, tape or disc is to the master negative, master tape or master audio disc of a film as defined in section 43 of the Finance (No.2) Act 1992.

Any such reference includes a reference to any rights in the film (or its soundtrack) that are held or acquired with the master negative, master tape or master audio disc.

3

In section 42 of the [1992 c. 48.] Finance (No.2) Act 1992 (relief for production or acquisition expenditure), for subsection (9) substitute—

9

This section has effect in relation to expenditure incurred—

a

on the production of a film completed on or after 10th March 1992, or

b

on the acquisition of the master negative, master tape or master disc of a film completed on or after that date.

4

In section 43 of that Act (interpretation)—

a

in subsection (2)(b) (treatment of acquisition of rights in film), for “any description of rights in it” substitute “any rights in the film (or its soundtrack) that are held or acquired with the master negative, master tape or master audio disc”; and

b

in subsection (3), omit paragraph (b) and the word “or” preceding it.

5

This section applies to expenditure on the production of a film—

a

if the first day of principal photography is on or after 21st March 2000, or

b

if the first day of principal photography is before that date but—

i

the film is completed on or after that date, and

ii

the person incurring the expenditure elects that the provisions of this section should apply.

For this purpose a film is completed at the time when it is first in a form in which it can reasonably be regarded as ready for copies of it to be made and distributed for presentation to the general public.

Any election under paragraph (b)(ii) above, once made, is irrevocable.

6

This section applies to expenditure incurred on the acquisition of a master negative, master tape or master audio disc of a film (as defined in section 43 of the [1992 c. 48.] Finance (No.2) Act 1992) on or after 6th April 2000.

Part IVStamp duty and Stamp duty reserve tax

Stamp duty

114Rates: conveyance or transfer on sale

1

In Schedule 13 to the [1999 c. 16.] Finance Act 1999 (instruments chargeable and rates of duty), in Part I (conveyance or transfer on sale), in the third column of the table in paragraph 4—

a

in the third entry, for “2.5%” substitute “3%”; and

b

in the fourth entry, for “3.5%” substitute “4%”.

2

This section applies to instruments executed on or after 28th March 2000.

3

But this section does not apply to an instrument giving effect to a contract made on or before 21st March 2000, unless—

a

the instrument is made in consequence of the exercise after that date of any option, right of pre-emption or similar right; or

b

the instrument transfers the property in question to, or vests it in, a person other than the purchaser under the contract, because of an assignment (or, in Scotland, assignation) or further contract made after that date.

4

This section shall be deemed to have come into force on 28th March 2000.

115Rates: duty on lease chargeable by reference to rent

1

In Schedule 13 to the [1999 c. 16.] Finance Act 1999 (instruments chargeable and rates of duty), in Part II (lease)—

a

in paragraph 11, in paragraph 1 of the table, and

b

in paragraph 12(3), in paragraph 1(a) and (b) of the table,

for “£500” substitute “£5,000”.

2

This section has effect in relation to instruments executed on or after 28th March 2000.

3

This section shall be deemed to have come into force on 28th March 2000.

116Rate of duty on seven year leases

1

In paragraph 12(3) of Schedule 13 to the [1999 c. 16.] Finance Act 1999 (rates of stamp duty on leases where part of consideration is rent), in paragraph 1 of the table, for “less than 7 years” substitute “not more than 7 years”.

2

This section applies to instruments executed on or after 1st October 1999, subject to Schedule 32 to this Act (which makes transitional provision for instruments executed on or after 1st October 1999 but before 28th March 2000).

3

This section shall be deemed to have come into force on 28th March 2000.

117Power to vary stamp duties

Schedule 33 to this Act (power to vary stamp duties) has effect.

118Land transferred etc for other property

1

Subsection (2) applies where—

a

an instrument transferring or vesting an estate or interest in land would not, apart from this section, be or fall to be treated as a conveyance or transfer on sale for the purposes of stamp duty; but

b

the transfer or vesting of the estate or interest is for consideration; and

c

the consideration is or includes any property (“the other property”).

2

For the purposes of Part I of Schedule 13 to the Finance Act 1999 (stamp duty on conveyance or transfer on sale) the instrument transferring or vesting the estate or interest shall be taken to be a transfer on sale of the estate or interest.

3

If—

a

the other property is or includes one or more estates or interests in land, and

b

ad valorem duty is chargeable on the conveyance or transfer of all or any of those estates or interests,

the amount of duty that would (apart from this subsection) be chargeable in consequence of subsection (2) on the transfer on sale there mentioned shall be reduced (but not below nil) by the total of the ad valorem duty chargeable as mentioned in paragraph (b).

4

If, for the purposes of Part I of Schedule 13 to the Finance Act 1999, the amount or value of the consideration for the transfer on sale mentioned in subsection (2) would (apart from this subsection) exceed the market value of the estate or interest immediately before the execution of the instrument transferring or vesting it, the amount or value of the consideration shall be taken for those purposes to be equal to that market value.

5

For the purposes of this section, the market value of property at any time is the price which that property might reasonably be expected to fetch on a sale at that time in the open market.

6

Subsection (2) has effect even though—

a

the transfer or vesting of the estate or interest is the whole or part of the consideration for a sale of the other property; or

b

the transaction is by way of exchange.

7

Subsection (2) does not affect any charge to stamp duty in respect of the same or any other instrument so far as it relates to the transfer of the other property.

8

This section is subject to subsection (5) of section 119.

9

This section shall be construed as one with the [1891 c. 39.] Stamp Act 1891.

10

This section applies to instruments executed on or after 28th March 2000.

11

But this section does not apply to an instrument giving effect to a contract made on or before 21st March 2000, unless—

a

the instrument is made in consequence of the exercise after that date of any option, right of pre-emption or similar right; or

b

the instrument transfers the property in question to, or vests it in, a person other than the purchaser under the contract, because of an assignment (or, in Scotland, assignation) or further contract made after that date.

12

This section shall be deemed to have come into force on 28th March 2000.

119Transfer of land to connected company

1

This section applies where an estate or interest in land is transferred to or vested in a company (“A”) and—

a

the person transferring or vesting the estate or interest (“B”) is connected with A; or

b

some or all of the consideration for the transfer or vesting consists of the issue or transfer of shares in a company with which B is connected.

2

For the purposes of Part I of Schedule 13 to the Finance Act 1999 (stamp duty on conveyance or transfer on sale) an instrument transferring or vesting the estate or interest shall be taken to be a transfer on sale of the estate or interest.

3

If for those purposes the amount or value of the consideration for the transfer on sale of the estate or interest would, apart from this subsection, be less than the value determined under subsection (4), the consideration shall be taken for those purposes to be the value determined under subsection (4).

4

That value is—

a

the market value of the estate or interest immediately before the execution of the instrument transferring or vesting it; but

b

reduced by the value of so much of any actual consideration as does not consist of property.

5

Where—

a

apart from this section, an instrument would be chargeable to stamp duty in accordance with section 118, and

b

apart from that section, the instrument would be chargeable to stamp duty in accordance with this section,

the stamp duty chargeable on the instrument shall be determined in accordance with this section (instead of that section).

6

This section applies only if, in consequence of its application, the instrument transferring or vesting the estate or interest is chargeable with a greater amount of stamp duty than it would be apart from this section and section 118.

7

For the purposes of this section, the market value of property at any time is the price which that property might reasonably be expected to fetch on a sale at that time in the open market.

8

In this section—

company” means any body corporate;

shares” includes stock and the reference to shares in a company includes a reference to securities issued by a company.

9

For the purposes of this section, the question whether any person is connected with another shall be determined in accordance with the provisions of section 839 of the Taxes Act 1988.

10

This section shall be construed as one with the [1891 c. 39.] Stamp Act 1891.

11

This section applies to instruments executed on or after 28th March 2000.

12

But this section does not apply to an instrument giving effect to a contract made on or before 21st March 2000, unless—

a

the instrument is made in consequence of the exercise after that date of any option, right of pre-emption or similar right; or

b

the instrument transfers the property in question to, or vests it in, a person other than the purchaser under the contract, because of an assignment (or, in Scotland, assignation) or further contract made after that date.

13

This section shall be deemed to have come into force on 28th March 2000.

120Exceptions from section 119

1

Section 119 does not apply by virtue of paragraph (a) of subsection (1) of that section in any of the following cases (any reference in this section to A or B being taken as a reference to the person referred to as A or B, as the case may be, in that subsection).

2

Case 1 is where B holds the estate or interest as nominee or bare trustee for A.

3

Case 2 is where A is to hold the estate or interest as nominee or bare trustee for B.

4

Case 3 is where B holds the estate or interest as nominee or bare trustee for some other person and A is to hold it as nominee or bare trustee for that other person.

5

Case 4 is where (in a case not falling within subsection (2) or (4) above)—

a

the transfer or vesting is a conveyance or transfer out of a settlement in or towards satisfaction of a beneficiary’s interest;

b

the beneficiary’s interest is not an interest acquired for money or money’s worth; and

c

the conveyance or transfer is a distribution of property in accordance with the provisions of the settlement.

6

Case 5 is where (in a case not falling within subsection (3) above) A—

a

is a person carrying on a business which consists of or includes the management of trusts; and

b

is to hold the estate or interest as trustee acting in the course of that business.

7

Case 6 is where (in a case not falling within subsection (3) above) A is to hold the estate or interest as trustee and, apart from section 839(3) of the Taxes Act 1988 (trustees as connected persons), would not be connected with B.

8

Case 7 is where—

a

B is a company;

b

the transfer or vesting is, or is part of, a distribution of assets (whether or not in connection with the winding up of the company); and

c

the estate or interest was acquired by B by virtue of an instrument which is duly stamped.

9

This section shall be construed as one with the [1891 c. 39.] Stamp Act 1891.

10

This section applies to instruments executed after the day on which this Act is passed.

121Grant of lease to connected company

1

This section applies where a lease is granted to a company (“A”) and—

a

the person granting the lease (“B”) is connected with A; or

b

some or all of the consideration for the grant of the lease consists of the issue or transfer of shares in a company with which B is connected.

2

Subsection (3) has effect for the purposes of stamp duty chargeable under Part II of Schedule 13 to the [1999 c. 16.] Finance Act 1999 (stamp duty on a lease) by reference to Part I of that Schedule (conveyance or transfer on sale).

3

If, apart from this subsection, the amount or value of the consideration for the grant would be less than the value determined under subsection (4), the consideration shall be taken to be the value determined under subsection (4).

4

That value is—

a

the market value, immediately before the instrument granting the lease is executed, of the lease granted; but

b

reduced by the value of so much of any actual consideration as does not consist of property.

5

This section applies only if, in consequence of its application, the lease is chargeable with a greater amount of stamp duty than it would be apart from this section.

6

For the purposes of this section, the market value of property at any time is the price which that property might reasonably be expected to fetch on a sale at that time in the open market.

7

In this section—

company” means any body corporate;

shares” includes stock and the reference to shares in a company includes a reference to securities issued by a company.

8

For the purposes of this section, the question whether any person is connected with another shall be determined in accordance with the provisions of section 839 of the Taxes Act 1988.

9

This section shall be construed as one with the [1891 c. 39.] Stamp Act 1891.

10

This section applies to instruments executed on or after 28th March 2000.

11

But this section does not apply to an instrument giving effect to a contract made on or before 21st March 2000, unless—

a

the instrument is made in consequence of the exercise after that date of any option, right of pre-emption or similar right; or

b

the instrument transfers the property in question to, or vests it in, a person other than the purchaser under the contract, because of an assignment (or, in Scotland, assignation) or further contract made after that date.

12

This section shall be deemed to have come into force on 28th March 2000.

122Marketable securities transferred etc for exempt property

1

Subsection (2) applies where—

a

an instrument transferring marketable securities would not, apart from this section, be or fall to be treated as a transfer on sale for the purposes of stamp duty; but

b

the transfer of the marketable securities is for consideration; and

c

the consideration is or includes any qualifying property (“the other property”).

2

For the purposes of Part I of Schedule 13 to the Finance Act 1999 (stamp duty on conveyance or transfer on sale) the instrument transferring the marketable securities shall be taken to be a transfer on sale of those securities.

3

If the amount or value of the consideration for that transfer on sale would (apart from this subsection) exceed the market value of the marketable securities immediately before the execution of the instrument transferring them, the amount or value of the consideration shall be taken to be equal to that market value.

For this purpose the market value of property at any time is the price which that property might reasonably be expected to fetch on a sale at that time in the open market.

4

Subsection (2) has effect even though—

a

the transfer of the marketable securities is the whole or part of the consideration for a sale of the other property; or

b

the transaction is by way of exchange.

5

Subsection (2) does not affect any charge to stamp duty in respect of the same or any other instrument so far as it relates to the transfer of the other property.

6

In this section “qualifying property” means any debt due, stock or securities, to the extent that the debt, stock or securities are not chargeable securities, within the meaning of Part IV of the [1986 c. 41.] Finance Act 1986 (stamp duty reserve tax).

7

This section shall be construed as one with the [1891 c. 39.] Stamp Act 1891.

8

This section applies to instruments executed on or after 28th March 2000.

9

But this section does not apply to an instrument giving effect to a contract made on or before 21st March 2000, unless—

a

the instrument is made in consequence of the exercise after that date of any option, right of pre-emption or similar right; or

b

the instrument transfers the property in question to, or vests it in, a person other than the purchaser under the contract, because of an assignment (or, in Scotland, assignation) or further contract made after that date.

10

This section shall be deemed to have come into force on 28th March 2000.

123Transfer of property between associated companies: Great Britain

1

Amend section 42 of the [1930 c. 28.] Finance Act 1930 as follows.

2

In subsection (2) (instruments on which stamp duty not chargeable) in paragraph (a) for “to another” substitute “(“the transferor”) to another (“the transferee”)”.

3

In that subsection, after paragraph (b) insert—

unless at the time the instrument is executed arrangements are in existence by virtue of which at that or some later time any person has or could obtain, or any persons together have or could obtain, control of the transferee but not of the transferor.

4

In subsection (2B) (body to be parent of another if beneficial owner of 75% of ordinary share capital) after “if at that time the first body” insert “(a)” and at the end of the subsection add—

b

is beneficially entitled to not less than 75 per cent of any profits available for distribution to equity holders of the second body; and

c

would be beneficially entitled to not less than 75 per cent of any assets of the second body available for distribution to its equity holders on a winding-up.

5

In subsection (3)—

a

after “The ownership referred to in” insert “paragraph (a) of”; and

b

for “this section” substitute “that paragraph”.

6

At the end of the section add—

5

Schedule 18 to the [1988 c. 1.] Income and Corporation Taxes Act 1988 shall apply for the purposes of paragraphs (b) and (c) of subsection (2B) as it applies for the purposes of paragraphs (a) and (b) of section 413(7) of that Act; but this is subject to subsection (6).

6

In determining for the purposes of this section whether a body corporate is the parent of the transferor, paragraphs 5(3) and 5B to 5E of Schedule 18 to the Income and Corporation Taxes Act 1988 shall not apply for the purposes of paragraph (b) or (c) of subsection (2B).

7

In this section, “control” shall be construed in accordance with section 840 of the [1988 c. 1.] Income and Corporation Taxes Act 1988.

7

This section has effect in relation to instruments executed after the day on which this Act is passed.

124Transfer of property between associated companies: Northern Ireland

1

Amend section 11 of the [1954 c. 23 (N.I.).] Finance Act (Northern Ireland) 1954 as follows.

2

After subsection (2) (instruments on which stamp duty not chargeable) insert—

2A

But this section does not apply to an instrument by virtue of subsection (2)(a) if, at the time the instrument is executed, arrangements are in existence by virtue of which at that or some later time any person has or could obtain, or any persons together have or could obtain, control of the transferee but not of the transferor.

3

In subsection (3AA) (body to be parent of another if beneficial owner of 75% of ordinary share capital) after “if at that time the first body” insert “(a)” and at the end of the subsection add—

b

is beneficially entitled to not less than 75 per cent of any profits available for distribution to equity holders of the second body; and

c

would be beneficially entitled to not less than 75 per cent of any assets of the second body available for distribution to its equity holders on a winding-up.

4

In subsection (3A)—

a

after “The ownership referred to in” insert “paragraph (a) of”; and

b

for “this section” substitute “that paragraph”.

5

At the end of the section add—

6

Schedule 18 to the [1988 c. 1.] Income and Corporation Taxes Act 1988 shall apply for the purposes of paragraphs (b) and (c) of subsection (3AA) as it applies for the purposes of paragraphs (a) and (b) of section 413(7) of that Act; but this is subject to subsection (7).

7

In determining for the purposes of this section whether a body corporate is the parent of the transferor, paragraphs 5(3) and 5B to 5E of Schedule 18 to the Income and Corporation Taxes Act 1988 shall not apply for the purposes of paragraph (b) or (c) of subsection (3AA).

8

In this section, “control” shall be construed in accordance with section 840 of the [1988 c. 1.] Income and Corporation Taxes Act 1988.

6

This section has effect in relation to instruments executed after the day on which this Act is passed.

125Grant of leases etc between associated companies

1

Amend section 151 of the [1995 c. 4.] Finance Act 1995 as follows.

2

In subsection (1) (stamp duty not chargeable on leases etc) at the end insert the following paragraph—

This subsection is subject to subsection (4A) below.

3

After subsection (4) insert—

4A

An instrument shall not be exempt from stamp duty by virtue of subsection (1) above if at the time the instrument is executed arrangements are in existence by virtue of which at that or some later time any person has or could obtain, or any persons together have or could obtain, control of the lessee but not of the lessor.

4

In subsection (8) (body to be parent of another if beneficial owner of 75% of ordinary share capital) after “if at that time the first body” insert “(a)” and at the end of the subsection add—

b

is beneficially entitled to not less than 75 per cent of any profits available for distribution to equity holders of the second body; and

c

would be beneficially entitled to not less than 75 per cent of any assets of the second body available for distribution to its equity holders on a winding-up.

5

In subsection (10)—

a

after “The ownership referred to in” insert “paragraph (a) of”; and

b

for “this section” substitute “that paragraph”.

6

After subsection (10) insert—

10A

Schedule 18 to the [1988 c. 1.] Income and Corporation Taxes Act 1988 shall apply for the purposes of paragraphs (b) and (c) of subsection (8) as it applies for the purposes of paragraphs (a) and (b) of section 413(7) of that Act; but this is subject to subsection (10B).

10B

In determining for the purposes of this section whether a body corporate is the parent of the lessor, paragraphs 5(3) and 5B to 5E of Schedule 18 to the Income and Corporation Taxes Act 1988 shall not apply for the purposes of paragraph (b) or (c) of subsection (8) above.

10C

In this section, “control” shall be construed in accordance with section 840 of the [1988 c. 1.] Income and Corporation Taxes Act 1988.

7

This section has effect in relation to instruments executed after the day on which this Act is passed.

126Future issues of stock

1

Amend section 55 of the [1891 c. 39.] Stamp Act 1891 (calculation of ad valorem duty in respect of stock and securities) as follows.

2

After subsection (1) insert—

1A

For the purposes of subsection (1), it is immaterial—

a

whether, at the time of the execution of the conveyance on sale, the stock or marketable security is or has been issued or is to be issued; and

b

in a case where the stock or marketable security is to be issued, when it is to be, or is, issued and whether the issue is certain or contingent.

3

This section has effect in relation to instruments executed after the day on which this Act is passed.

127Company acquisition reliefs: redeemable shares

1

Amend section 75 of the [1986 c. 41.] Finance Act 1986 (acquisitions: reliefs) in accordance with subsections (2) and (3).

2

In subsection (4), in paragraph (a) (which requires that the consideration for the acquisition consists of or includes the issue of shares) after “the issue of” insert “non-redeemable”.

3

In subsection (4), after paragraph (b) add—

In paragraph (a) above, “non-redeemable shares” means shares which are not redeemable shares.

4

In section 76 of the [1986 c. 41.] Finance Act 1986 (acquisitions: further provisions about reliefs) in subsection (3)(a) (which requires that the consideration for the acquisition consists of or includes the issue of shares) for “shares” substitute “non-redeemable shares (within the meaning of section 75(4)(a) above)”.

5

This section has effect in relation to instruments executed after the day on which this Act is passed.

128Surrender of leases

1

Where a lease is or has been surrendered or, in Scotland, renounced at any time, a document evidencing the surrender or renunciation shall be treated for the purposes of stamp duty as if it were a deed executed at that time effecting the surrender or renunciation.

2

Stamp duty shall be chargeable by virtue of subsection (1) on a document containing a statutory declaration, notwithstanding anything in rule 316(1) of the [S.R.&O. 1925/1093.] Land Registration Rules 1925 or any other provision of those Rules or of any other rules (whenever made) under section 144 of the [1925 c. 21.] Land Registration Act 1925.

3

Stamp duty shall not be chargeable by virtue of subsection (1) on any lease or agreement for a lease or with respect to any letting if the lease or agreement—

a

is made in consideration of the surrender or renunciation; and

b

relates to the same subject matter as the lease surrendered or renounced.

4

Stamp duty shall not be chargeable by virtue of subsection (1) on any document if a document falling within subsection (5) has been duly stamped.

5

The documents that fall within this subsection are—

a

a deed effecting the surrender or renunciation;

b

an agreement which falls to be treated for the purposes of stamp duty as if it were such a deed;

c

any document which falls to be so treated by virtue of subsection (1); and

d

any lease or agreement falling within subsection (3).

6

A land registrar shall regard a document which by virtue of subsection (4) is not chargeable to stamp duty by virtue of subsection (1) as not duly stamped unless—

a

it is stamped as if it were a deed effecting the surrender or renunciation; or

b

it appears by some stamp impressed on it that the full and proper duty chargeable on such a deed has been paid on another document; or

c

it appears by some stamp impressed on it that a lease or agreement falling within subsection (3) has been duly stamped; or

d

the land registrar is aware of a document falling within subsection (5) which has been duly stamped.

7

The documents which evidence the surrender or renunciation of a lease shall be taken to include an application, in consequence of the surrender or renunciation of the lease, for—

a

the making in a land register, or

b

the removal from a land register,

of an entry relating to the lease.

8

In this section—

“land register”—

a

in relation to England and Wales, means the register kept under section 1 of the [1925 c. 21.] Land Registration Act 1925;

b

in relation to Scotland, means the Land Register of Scotland or the General Register of Sasines;

c

in relation to Northern Ireland, means the register maintained under section 10 of the [1970 c. 18 (N.I.)] Land Registration Act (Northern Ireland) 1970;

“land registrar”—

a

in relation to England and Wales, means the Chief Land Registrar or any other officer of Her Majesty’s Land Registry exercising functions of the Chief Land Registrar;

b

in relation to Scotland, means the Keeper of the Registers of Scotland;

c

in relation to Northern Ireland, means the Registrar of Titles or any other official of the Land Registry exercising functions of the Registrar of Titles.

9

This section shall be construed as one with the [1891 c. 39.] Stamp Act 1891.

10

This section applies to documents relating to the surrender or renunciation of a lease after the day on which this Act is passed.

129Abolition of duty on instruments relating to intellectual property

1

No stamp duty is chargeable on an instrument for the sale, transfer or other disposition of intellectual property.

2

In subsection (1) “intellectual property” means—

a

any patent, trade mark, registered design, copyright or design right,

b

any plant breeders’ rights and rights under section 7 of the [1997 c. 66.] Plant Varieties Act 1997,

c

any licence or other right in respect of anything within paragraph (a) or (b), and

d

any rights under the law of a country or territory outside the United Kingdom that correspond or are similar to those within paragraph (a), (b) or (c).

3

Schedule 34 to this Act (which contains provisions supplementing this section) has effect.

4

This section and Schedule 34 shall be construed as one with the [1891 c. 39.] Stamp Act 1891.

5

This section applies to instruments executed on or after 28th March 2000.

6

This section shall be deemed to have come into force on that date.

130Transfers to registered social landlords etc

1

No stamp duty shall be chargeable under Part I or II, or paragraph 16 of Part III, of Schedule 13 to the [1999 c. 16.] Finance Act 1999 on a conveyance or transfer of an estate or interest in land, or on a lease of land,—

a

to a qualifying landlord controlled by its tenants;

b

to a qualifying landlord by a qualifying transferor; or

c

to a qualifying landlord purchasing the estate or interest, or the grant of the lease, with the assistance of a public subsidy.

2

For the purposes of this section the cases where a qualifying landlord is controlled by its tenants are those cases where the majority of the board members of the qualifying landlord are tenants occupying properties owned or managed by the qualifying landlord.

3

For the purposes of subsection (2) a “board member” means—

a

in relation to a qualifying landlord which is a company, a director of the company;

b

in relation to a qualifying landlord which is a body corporate whose affairs are managed by its members, a member;

c

in relation to a qualifying landlord which is a body of trustees, a member of that body of trustees;

d

in relation to a qualifying landlord not falling within any of paragraphs (a) to (c), a member of the committee of management or other body to which is entrusted the direction of the affairs of the qualifying landlord.

4

In subsection (3), “company” has the same meaning as in the [1985 c. 6.] Companies Act 1985 (see section 735(1) of that Act).

5

In this section “qualifying landlord” means—

a

in relation to England and Wales, any body registered as a social landlord in a register maintained under section 1(1) of the [1996 c. 52.] Housing Act 1996;

b

in relation to Scotland—

i

any housing association registered in the register maintained under section 3(1) of the [1985 c. 69.] Housing Associations Act 1985 by Scottish Homes; or

ii

any body corporate whose objects correspond to those of a housing association and which, pursuant to a contract with Scottish Homes, is registered in a register kept for the purpose by Scottish Homes;

c

in relation to Northern Ireland, any housing association registered in the register maintained under Article 14 of the [S.I. 1992/1725 (N.I. 15).] Housing (Northern Ireland) Order 1992.

6

In this section “qualifying transferor” means any of the following—

a

a qualifying landlord;

b

a housing action trust established under Part III of the [1988 c. 50.] Housing Act 1988;

c

a principal council, within the meaning of the [1972 c. 70.] Local Government Act 1972;

d

the Common Council of the City of London;

e

a council constituted under section 2 of the [1994 c. 39.] Local Government etc. (Scotland) Act 1994;

f

Scottish Homes;

g

the Department for Social Development in Northern Ireland;

h

the Northern Ireland Housing Executive.

7

In this section “public subsidy” means any grant or other financial assistance—

a

made or given by way of a distribution pursuant to section 25 of the [1993 c. 39.] National Lottery etc. Act 1993 (application of money by distributing bodies);

b

under section 18 of the [1996 c. 52.] Housing Act 1996 (social housing grants);

c

under section 126 of the [1996 c. 53.] Housing Grants, Construction and Regeneration Act 1996 (financial assistance for regeneration and development);

d

under section 2 of the [1988 c. 43.] Housing (Scotland) Act 1988 (general functions of Scottish Homes); or

e

under Article 33 of the [S.I. 1992/1725 (N.I. 15).] Housing (Northern Ireland) Order 1992 (housing association grants).

8

Where stamp duty would be chargeable on an instrument but for paragraph (c) of subsection (1), that subsection shall only have effect in relation to the instrument if the instrument is certified to the Board by the qualifying landlord concerned as being an instrument on which stamp duty is by virtue of that paragraph not chargeable.

9

An instrument on which stamp duty is not chargeable by virtue only of this section shall not be taken to be duly stamped unless—

a

it is stamped with the duty to which it would be liable but for this section; or

b

it has, in accordance with section 12 of the [1891 c. 39.] Stamp Act 1891, been stamped with a particular stamp denoting that it is not chargeable with any duty.

10

This section applies to instruments executed after the day on which this Act is passed.

131Relief for certain instruments executed before this Act has effect

1

This section applies to an instrument of any of the following descriptions executed in the period beginning with 22nd March 2000 and ending with the day on which this Act is passed—

a

an instrument transferring or vesting an estate or interest in land in such circumstances as are mentioned in section 119 (transfer of land to connected company), in a case specified in section 120 (excepted cases);

b

a conveyance or transfer of an estate or interest in land, or a lease of land, to a qualifying landlord within the meaning of section 130 (transfers to registered social landlords, etc.) from a qualifying transferor within subsection (6)(c), (d), (e), (f) or (h) of that section.

2

If the instrument is not stamped until after the day on which this Act is passed, the law in force at the time of its execution shall be deemed for stamp duty purposes to be that which would have applied if it had been executed after that day.

3

If the Commissioners are satisfied that—

a

the instrument was stamped on or before the day on which this Act is passed,

b

stamp duty was chargeable in respect of it, and

c

had it been stamped after that day no stamp duty, or less stamp duty, would have been chargeable,

they shall pay to such person as they consider appropriate an amount equal to the duty (and any interest or penalty) that would not have been payable if the law in force at the time of execution of the instrument had been that which would have applied had it been executed after that day.

4

Any such payment must be claimed before 1st April 2001.

5

Entitlement to a payment is subject to compliance with such conditions as the Commissioners may determine with respect to the production of the instrument, to its being stamped so as to indicate that it has been produced under this section or to other matters.

6

For the purposes of section 10 of the [1866 c. 39.] Exchequer and Audit Departments Act 1866 (Commissioners to deduct repayments from gross revenues) any amount paid under this section shall be treated as a repayment.

7

This section shall be construed as one with the [1891 c. 39.] Stamp Act 1891.

132The Northern Ireland Assembly Commission

1

Amend section 55 of the [1987 c. 16.] Finance Act 1987 (Crown exemption from stamp duty) as follows.

2

In subsection (1) (which specifies the bodies relieved from stamp duty)—

a

after “agreed to be made” insert “(a)”;

b

after “Minister of the Crown or” insert “(b)”; and

c

after “Treasury, or” insert “(c)”.

3

In subsection (1), after “National Assembly for Wales,” insert

or

d

to the Northern Ireland Assembly Commission,

4

Subsection (3) has effect in relation to instruments executed on or after 28th March 2000.

5

This section shall be deemed to have come into force on 28th March 2000.

Stamp duty and Stamp duty reserve tax

133Loan capital where return bears inverse relationship to results

1

In section 79 of the [1986 c. 41.] Finance Act 1986 (loan capital), after subsection (7) insert—

7A

Subsection (4) above shall not be prevented from applying to an instrument by virtue of subsection (6)(b) above by reason only that the loan capital concerned carries a right to interest which—

a

reduces in the event of the results of a business or part of a business improving, or the value of any property increasing, or

b

increases in the event of the results of a business or part of a business deteriorating, or the value of any property diminishing.

2

For the purposes of stamp duty, subsection (1) above has effect where the instrument is executed on or after 21st March 2000.

3

For the purposes of stamp duty reserve tax, subsection (1) above has effect—

a

in relation to the charge to tax under section 87 of the Finance Act 1986, where—

i

the agreement to transfer is conditional and the condition is satisfied on or after 21st March 2000, or

ii

the agreement is not conditional and is made on or after that date;

b

in relation to the charge to tax under section 93(1) of that Act, where securities are transferred, issued or appropriated on or after 21st March 2000 (whenever the arrangement was made);

c

in relation to the charge to tax under section 96(1) of that Act, where securities are transferred or issued on or after 21st March 2000 (whenever the arrangement was made);

d

in relation to the charge to tax under section 93(10) of that Act, where securities are issued or transferred on sale, under terms there mentioned, on or after 21st March 2000;

e

in relation to the charge to tax under section 96(8) of that Act, where securities are issued or transferred on sale, under terms there mentioned, on or after 21st March 2000.

134Transfers between depositary receipt systems and clearance systems

1

In Part III of the [1986 c. 41.] Finance Act 1986 (stamp duty), after section 72 insert—

Transfers between depositary receipt system and clearance system

72ATransfers between depositary receipt system and clearance system

1

Where an instrument transfers relevant securities of a company incorporated in the United Kingdom between a depositary receipt system and a clearance system—

a

the provisions of section 67(2) to (5) or, as the case may be, section 70(2) to (5) above shall not apply, and

b

the stamp duty chargeable on the instrument is £5.

2

A transfer between a depositary receipt system and a clearance system means a transfer—

a

from (or to) a company that at the time of the transfer falls within section 67(6) above, and

b

to (or from) a company that at that time falls within section 70(6) above.

3

This section does not apply to a transfer from a clearance system (that is, from such a company as is mentioned in subsection (2)(b) above) if at the time of the transfer an election is in force under section 97A below in relation to the clearance services for the purposes of which the securities are held immediately before the transfer.

2

In Part IV of the [1986 c. 41.] Finance Act 1986 (stamp duty reserve tax), after section 97A insert—

97BTransfer between depositary receipt system and clearance system

1

There shall be no charge to tax under section 93 or 96 above where securities are transferred between a depositary receipt system and a clearance system.

2

A transfer between a depositary receipt system and a clearance system means a transfer—

a

from (or to) a company which at the time of the transfer falls within section 67(6) above, and

b

to (or from) a company which at that time falls within section 70(6) above.

3

This section does not apply to a transfer from a clearance system (that is, from such a company as is mentioned in subsection (2)(b) above) if at the time of the transfer an election is in force under section 97A above in relation to the clearance services for the purposes of which the securities are held immediately before the transfer.

3

In sections 67(9), 70(9), 95(1) and 97(1) of the [1986 c. 41.] Finance Act 1986 (transfers between depositary receipt systems or between clearance systems), the words “and is resident in the United Kingdom” and “and is so resident” shall cease to have effect.

4

In section 97A of that Act (clearance services: election for alternative system of charge), after subsection (12) add—

13

Nothing in section 70(9) or 97(1) above has effect to prevent a charge to stamp duty or stamp duty reserve tax arising—

a

on a transfer to which subsection (5) above applies, or

b

on a deemed transfer under subsection (11) above.

5

The amendments in this section have effect as follows—

a

subsection (1), and subsections (3) and (4) as they apply for stamp duty purposes, apply in relation to instruments executed after the day on which this Act is passed;

b

subsection (2), and subsections (3) and (4) as they apply for the purposes of stamp duty reserve tax, apply where the securities are transferred after that day.

Part VOther taxes

Value added tax

135Supplies to which reduced rate applies

1

Schedule 35 to this Act (which amends Schedule A1 to the [1994 c. 23.] Value Added Tax Act 1994 for the purpose of extending the range of supplies to which the reduced rate of value added tax applies) has effect.

2

The amendments made by that Schedule have effect in relation to supplies made on or after 1st April 2000.

3

Subsection (2) does not apply to the amendment made by paragraph 8(5) of that Schedule.

That amendment has effect in relation to supplies made after the day on which this Act is passed.

136Disposals of assets for which a VAT repayment is claimed

1

In section 3(2) of the [1994 c. 23.] Value Added Tax Act 1994 (taxable persons and registration), for “Schedules 1 to 3” there shall be substituted “Schedules 1 to 3A”.

2

In section 67 of that Act (failure to notify)—

a

in subsection (1)(a), for “or with paragraph 3 or 8(2) of Schedule 3” there shall be substituted “, with paragraph 3 or 8(2) of Schedule 3 or paragraph 3, 4 or 7(2) or (3) of Schedule 3A”;

b

in subsection (3)(a), for “or paragraph 3 of Schedule 3” there shall be substituted “, paragraph 3 of Schedule 3 or paragraph 3 or 4 of Schedule 3A”; and

c

in subsection (3)(b), for “or with sub-paragraph (2) of paragraph 8 of Schedule 3” there shall be substituted “, with sub-paragraph (2) of paragraph 8 of Schedule 3 or with sub-paragraph (2) or (3) of paragraph 7 of Schedule 3A”.

3

In section 69(1)(a) of that Act (breaches of regulatory provisions), for “or paragraph 5 of Schedule 3” there shall be substituted “, paragraph 5 of Schedule 3 or paragraph 5 of Schedule 3A”.

4

In section 73(3)(b) of that Act (failure to make returns etc.), for “or paragraph 6(2) or (3) of Schedule 3” there shall be substituted “, paragraph 6(2) or (3) of Schedule 3 or paragraph 6(1) or (2) of Schedule 3A”.

5

In section 74(1)(c) of that Act (interest on VAT recovered or recoverable by assessment), for “under paragraph 8 of Schedule 3” there shall be substituted “, under paragraph 8 of Schedule 3 or under paragraph 7 of Schedule 3A”.

6

In the following provisions of that Act—

a

paragraph 1(4)(a) and (5) of Schedule 1 (registration in respect of taxable supplies); and

b

paragraph 1(4) of Schedule 2 (registration in respect of supplies from other member States),

for “or paragraph 6(3) of Schedule 3” there shall be substituted “, paragraph 6(3) of Schedule 3 or paragraph 6(2) of Schedule 3A”.

7

In paragraph 1(3) of Schedule 3 to that Act (registration in respect of acquisitions from other member States), for “or paragraph 6(2) of Schedule 2” there shall be substituted “, paragraph 6(2) of Schedule 2 or paragraph 6(2) of Schedule 3A”.

8

After Schedule 3 to that Act there shall be inserted the Schedule 3A set out in Schedule 36 to this Act.

9

In paragraph 5(5) of Schedule 4 to that Act (matters to be treated as a supply of goods or services), for the words from “under sections 25 and 26” to the end there shall be substituted—

a

under sections 25 and 26, to credit for the whole or any part of the VAT on the supply, acquisition or importation of those goods or of anything comprised in them; or

b

under a scheme embodied in regulations made under section 39, to a repayment of VAT on the supply or importation of those goods or of anything comprised in them.

10

Subsections (1) to (7) and (9) above have effect in relation to supplies made on or after 21st March 2000; and subsection (8) above and Schedule 36 to this Act have effect in relation to relevant supplies (within the meaning of Schedule 3A to that Act) made on or after that date.

137Gold: penalty for failure to comply with record-keeping requirements etc

1

Part IV of the [1994 c. 23.] Value Added Tax Act 1994 (administration, collection and enforcement) is amended as follows.

2

After section 69 (breaches of regulatory provisions) insert—

69ABreach of record-keeping requirements etc. in relation to transactions in gold

1

This section applies where a person fails to comply with a requirement of regulations under section 13(5)(a) or (b) of the [1999 c. 16.] Finance Act 1999 (gold: duties to keep records or provide information).

Where this section applies, the provisions of section 69 do not apply.

2

A person who fails to comply with any such requirement is liable to a penalty not exceeding 17.5% of the value of the transactions to which the failure relates.

3

For the purposes of assessing the amount of any such penalty, the value of the transactions to which the failure relates shall be determined by the Commissioners to the best of their judgement and notified by them to the person liable.

4

No assessment of a penalty under this section shall be made more than 2 years after evidence of facts sufficient in the opinion of the Commissioners to justify the making of the assessment comes to their knowledge.

5

The reference in subsection (4) above to facts sufficient to justify the making of the assessment is to facts sufficient—

a

to indicate that there had been a failure to comply with any such requirement as is referred to in subsection (1) above, and

b

to determine the value of the transactions to which the failure relates.

6

A failure by any person to comply with any such requirement as is mentioned in subsection (1) above shall not give rise to a liability to a penalty under this section if the person concerned satisfies the Commissioners or, on appeal, a tribunal, that there is a reasonable excuse for the failure.

7

Where by reason of conduct falling within subsection (1) above a person—

a

is assessed to a penalty under section 60, or

b

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

that conduct shall not also give rise to a penalty under this section.

3

In section 70(1) of that Act (mitigation of penalties), for “or 67” substitute “, 67 or 69A”.

4

In section 76(1) of that Act (assessment of amount due by way of penalty etc.), for “to 69” (in both places) substitute “to 69A”.

5

In section 83 of that Act (appeals), in paragraph (n) for “59 to 69” substitute “59 to 69A”.

Inheritance tax

138Treatment of employee share ownership trusts

1

The [1984 c. 51.] Inheritance Tax Act 1984 is amended as follows.

2

In section 13 (dispositions by close companies for benefit of employees), in subsection (4), after paragraph (b) insert

; or

c

if the trusts are those of an employee share ownership plan approved under Schedule 8 to the Finance Act 2000, of any power to appropriate shares to, or acquire shares on behalf of, individuals under the plan.

3

In section 72 (property leaving employee trusts and newspaper trusts)—

a

in subsection (2) after “subsection (4)” insert “, (4A)”, and

b

after subsection (4) insert—

4A

If the trusts are those of an employee share ownership plan approved under Schedule 8 to the Finance Act 2000, tax shall not be chargeable under this section by virtue of subsection (3)(b) above on an appropriation of shares to, or acquisition of shares on behalf of, an individual under the plan.

4

In section 86 (trusts for benefit of employees), in subsection (3), after paragraph (b) insert

; or

c

the trusts on which the settled property is held are those of an employee share ownership plan approved under Schedule 8 to the Finance Act 2000.

Petroleum revenue tax

139Operating expenditure incurred while safeguard relief applies

1

After section 9 of the [1975 c. 22.] Oil Taxation Act 1975 insert—

9AOperating expenditure incurred while section 9 applies

1

Subsections (2) and (3) below apply where—

a

operating expenditure is incurred by a participator in an oil field during a chargeable period to which section 9(1) of this Act applies (“the relevant chargeable period”);

b

a claim for the allowance of the expenditure is made under Schedule 5 or 6 for the claim period which coincides with the relevant chargeable period (“the relevant claim period”); and

c

the claim is made more than four months after the end of the relevant claim period.

2

The Board shall not allow the expenditure except to such extent (if any) as they consider necessary to secure that the participator’s overall liability to tax is no greater than it would have been if the claim had been allowed before the Board had made an assessment to tax or a determination on or in relation to the participator in respect of the field for the relevant chargeable period.

3

Any amounts of oil allowance which, if the claim had been allowed before the Board had made an assessment to tax or a determination on or in relation to the participator in respect of the field for the relevant chargeable period, would not have been utilised by him in that period, or any subsequent chargeable period, shall be disregarded for the purposes of section 8(6) of this Act.

4

Where—

a

the participator transfers the whole or part of his interest in the oil field to another person; and

b

Parts II and III of Schedule 17 to the [1980 c. 48.] Finance Act 1980 apply to the transfer,

subsections (2) and (3) above shall have effect as if references to the participator included references to that other person.

5

In this section—

acquisition”, in relation to an asset, includes acquisition of an interest in the asset;

capital expenditure” means expenditure on the acquisition or construction of an asset which is to be used for any of the following purposes—

a

for ascertaining the extent or characteristics of any oil-bearing area wholly or partly included in the field, or what the reserves of oil of any such oil-bearing area are;

b

for winning oil from the field;

c

for transporting oil won from the field, whether to a place in the United Kingdom or to a place in another country; or

d

for the initial treatment or initial storage of oil won from the field;

operating expenditure” means any expenditure other than capital expenditure.

6

Where a claim period is a period of twelve months, this section shall have effect as if—

a

that period were two separate claim periods of six months each;

b

any claim for that period under Schedule 5 or 6 were two separate claims, one for each of those separate periods; and

c

the operating expenditure to which that claim relates were apportioned between those separate periods and those separate claims in such manner as may be just and reasonable.

2

This section has effect in relation to expenditure incurred on or after 21st March 2000.

Landfill tax

140Rate

1

In section 42 of the [1996 c. 8.] Finance Act 1996 (amount of landfill tax), in subsections (1)(a) and (2) for “£10” substitute “£11”.

2

This section has effect in relation to taxable disposals made, or treated as made, on or after 1st April 2000.

141Disposals which are not taxable

1

In section 62 of the [1996 c. 8.] Finance Act 1996 (regulations about taxable disposals) amend subsection (7) (limit on power to make regulations providing that a disposal is not taxable) as follows.

2

For paragraph (a) substitute—

a

the material comprised in the disposal is held temporarily pending one or more of the following—

i

the incineration or recycling of the material, or

ii

the removal of the material for use elsewhere, or

iii

the use of the material, if it is qualifying material within the meaning of section 42(3) above, for the restoration to use of the site at which the disposal takes place, or any part of that site, upon completion of waste disposal operations at the site, or as the case may be, that part of the site, or

iv

the sorting of the material with a view to its removal elsewhere or its eventual disposal, and

3

In paragraph (b) for “the temporary disposal is made” substitute “the material in question is held temporarily”.

142Secondary liability

1

In section 60 of the [1996 c. 8.] Finance Act 1996 (which gives effect to Schedule 5 to the Act), after “penalties” insert “, secondary liability”.

2

Accordingly the sidenote to that section becomes “Information, powers, penalties, secondary liability, etc”.

3

At the end of Schedule 5 to that Act (supplementary provisions relating to landfill tax) add the Part VIII set out in Schedule 37 to this Act.

4

Subsection (3) has effect in relation to taxable disposals made on or after the day on which this Act is passed.

Part VIMiscellaneous and supplementary provisions

Incentives for electronic communications

143Power to provide incentives to use electronic communications

1

Regulations may be made in accordance with Schedule 38 to this Act for providing incentives to use electronic communications.

2

Anything received by way of incentive under any such regulations shall not be regarded as income for any purposes of the Tax Acts.

Compliance

144Offence of fraudulent evasion of income tax

1

A person commits an offence if he is knowingly concerned in the fraudulent evasion of income tax by him or any other person.

2

A person guilty of an offence under this section is liable—

a

on summary conviction, to imprisonment for a term not exceeding six months or a fine not exceeding the statutory maximum, or both;

b

on conviction on indictment, to imprisonment for a term not exceeding seven years or a fine, or both.

3

This section applies to things done or omitted on or after 1st January 2001.

145Information about interest etc paid, credited or received

1

In section 17 of the [1970 c. 9.] Taxes Management Act 1970 (interest paid or credited by banks etc without or after deduction of tax), subsections (4B) and (4C) shall cease to have effect.

2

In subsection (5) of that section—

a

for paragraph (c) there shall be substituted—

c

that if a person is required—

i

to make and deliver a return under subsection (1) above;

ii

to include information in such a return under any provision made under paragraph (a) above; or

iii

to furnish information under any provision made under paragraph (b) above,

and the notice under subsection (1) above specifies the form in which the return is to be made and delivered, or the information is to be included or furnished, the person shall make and deliver the return, or include or furnish the information, in that form;

b

at the end there shall be inserted—

The further information required as mentioned in paragraph (a) or (b) above may include, in prescribed cases, the name and address of the person beneficially entitled to the interest paid or credited.

3

After paragraph (a) of subsection (6) of that section there shall be inserted—

aa

may make provision with respect to the furnishing of information by persons required—

i

to make and deliver a return under subsection (1) above;

ii

to include information in such a return under any provision made under subsection (5)(a) above; or

iii

to furnish information under any provision made under subsection (5)(b) above,

including the inspection of books, documents and other records on behalf of the Board;

4

In subsection (1) of section 18 of that Act (interest paid without or after deduction of tax)—

a

for “by whom” there shall be substituted “by or through whom”; and

b

for “who receives any such interest” there shall be substituted “by whom any such interest is received”.

5

Subsections (3) and (3AA) of that section shall cease to have effect.

6

In subsection (3A) of that section, after “interest paid” there shall be inserted “or received”.

7

At the end of subsection (3B) of that section there shall be inserted—

The further information required as mentioned in paragraph (a) above may include, in prescribed cases, the name and address of the person beneficially entitled to the interest paid or received.

8

After paragraph (a) of subsection (3C) of that section there shall be inserted—

aa

may make provision with respect to the furnishing of information by persons required to furnish information under subsection (1) above, or under any provision made under subsection (3B)(a) above, including the inspection of books, documents and other records on behalf of the Board;

9

For subsection (3D) of that section there shall be substituted—

3D

For the purposes of this section interest shall be treated as received by any person if it is received by another person at his direction or with his consent.

3E

For the purposes of this section the following shall be treated as interest—

a

any dividend in respect of a share in a building society;

b

any amount to which a person holding a relevant discounted security is entitled on the redemption of that security; and

c

any foreign dividend.

3F

In subsection (3E)(b) above “relevant discounted security” has the meaning given by paragraph 3 of Schedule 13 to the [1996 c. 8.] Finance Act 1996.

3G

In subsection (3E)(c) above “foreign dividend” means any annual payment, interest or dividend payable out of, or in respect of the stocks, funds, shares or securities of—

a

a body of persons that is not resident in the United Kingdom, or

b

a government or public or local authority in a country outside the United Kingdom.

10

Section 482A of Taxes Act 1988 (audit powers in relation to non-residents) shall cease to have effect.

11

This section has effect in relation to amounts paid, credited or received on or after 6th April 2001.

146International exchange of information: general

1

After section 815B of the Taxes Act 1988 there shall be inserted—

815CExchange of information with other countries

1

If Her Majesty by Order in Council declares that arrangements specified in the Order have been made with the government of any territory outside the United Kingdom with a view to the exchange of information necessary for carrying out—

a

the domestic laws of the United Kingdom concerning income tax, capital gains tax and corporation tax in respect of income and chargeable gains; and

b

the laws of the territory to which the arrangements relate concerning any taxes of a similar character to those taxes imposed by the laws of that territory,

and that it is expedient that those arrangements shall have effect, then those arrangements shall have effect notwithstanding anything in any enactment.

2

Any Order in Council made under this section revoking an earlier such Order in Council may contain such transitional provisions as appear to Her Majesty to be necessary or expedient.

3

An Order under this section shall not be submitted to Her Majesty in Council unless a draft of the Order has been laid before and approved by a resolution of the House of Commons.

2

In subsection (2) of section 816 of that Act (disclosure of information), after “section 788” there shall be inserted “or 815C” and after that subsection there shall be inserted—

2ZA

Neither the Board nor an authorised officer of the Board shall disclose any information in pursuance of any arrangements having effect by virtue of section 815C unless satisfied that the government with which the arrangements are made is bound by, or has undertaken to observe, rules of confidentiality with respect to the information which are not less strict than those applying to it in the United Kingdom.

3

Subsections (1) to (8) and (8C) to (9) of section 20 of the [1970 c. 9.] Taxes Management Act 1970 (powers to call for information relevant to liability to income tax, corporation tax or capital gains tax) shall have effect as if the references in those provisions to tax liability included a reference to liability to a tax which—

a

is a tax of a territory outside the United Kingdom; and

b

is covered by arrangements having effect under section 788 or 815C of the Taxes Act 1988 and containing provision with respect to the obtaining (as well as the disclosure) of information.

4

In their application by virtue of subsection (3) above those provisions shall have effect as if—

a

the reference in section 20(7A) to any provision of the Taxes Acts were a reference to any provision of the law of the territory concerned;

b

the references in subsection (2) of section 20B to an appeal relating to tax were references to an appeal, review or similar proceedings under the law of that territory relating to the tax in question; and

c

the reference in subsection (6) of that section to believing that tax has or may have been lost to the Crown were a reference to believing that the tax in question has or may have been lost to that territory.

147International exchange of information: inheritance tax

1

After section 220 of the [1984 c. 51.] Inheritance Tax Act 1984 there shall be inserted—

220AExchange of information with other countries

1

If Her Majesty by Order in Council declares that arrangements specified in the Order have been made with the government of any territory outside the United Kingdom with a view to the exchange of information necessary for carrying out—

a

the domestic laws of the United Kingdom concerning inheritance tax; and

b

the laws of the territory to which the arrangements relate concerning any taxes imposed by the laws of that territory which are of a similar character to that tax or are chargeable on or by reference to death or gifts inter vivos,

and that it is expedient that those arrangements shall have effect, then those arrangements shall have effect notwithstanding anything in any enactment.

2

Any Order in Council made under this section revoking an earlier such Order in Council may contain such transitional provisions as appear to Her Majesty to be necessary or expedient.

3

An Order under this section shall not be submitted to Her Majesty in Council unless a draft of the Order has been laid before and approved by a resolution of the House of Commons.

4

Where any arrangements have effect by virtue of this section, no obligation of secrecy shall prevent the Board or an authorised officer of the Board from disclosing to any authorised officer of the government with which the arrangements are made such information as is required to be disclosed in accordance with the arrangements.

5

Neither the Board nor an authorised officer of the Board shall disclose any information in pursuance of any arrangements having effect by virtue of this section unless satisfied that the government with which the arrangements are made is bound by, or has undertaken to observe, rules of confidentiality with respect to the information which are not less strict than those applying to it in the United Kingdom.

2

Section 219 of the [1984 c. 51.] Inheritance Tax Act 1984 (power to obtain information for purposes of the Act) shall have effect as if the reference to that Act in subsection (1) of that section included a reference to any provision of the law of a territory outside the United Kingdom in accordance with which there is charged any tax which—

a

is of a character similar to that of inheritance tax or is chargeable on or by reference to death or gifts inter vivos; and

b

is covered by arrangements having effect under section 158 or 220A of the Inheritance Tax Act 1984 and containing provision with respect to the obtaining (as well as the disclosure) of information.

148Use of minimum wage information

1

Information obtained by an officer acting for the purposes of the [1998 c. 39.] National Minimum Wage Act 1998 (“the 1998 Act”) by virtue of section 13(1)(a) or (b) of that Act (officers) may be supplied by or with the authority of the Secretary of State to the Board for the purpose of any of its functions.

2

Information obtained by an officer of the Board acting in accordance with section 13(1)(b) of the 1998 Act may be used for the purpose of any functions of the Board.

3

Information supplied to the Secretary of State under section 16(2) of the 1998 Act (information obtained by agricultural wages officers) may be supplied by the Secretary of State to the Board for the purpose of any of its functions.

4

For section 15(6) of the 1998 Act (restrictions on use of information) there shall be substituted—

6

This section—

a

does not limit the circumstances in which information may be supplied or used apart from this section; and

b

is subject to section 148 of the Finance Act 2000 (use of minimum wage information).

149Orders for the delivery of documents

1

After section 20B of the [1970 c. 9.] Taxes Management Act 1970 insert—

20BAOrders for the delivery of documents

1

The appropriate judicial authority may make an order under this section if satisfied on information on oath given by an authorised officer of the Board—

a

that there is reasonable ground for suspecting that an offence involving serious fraud in connection with, or in relation to, tax is being, has been or is about to be committed, and

b

that documents which may be required as evidence for the purposes of any proceedings in respect of such an offence are or may be in the power or possession of any person.

2

An order under this section is an order requiring the person who appears to the authority to have in his possession or power the documents specified or described in the order to deliver them to an officer of the Board within—

a

ten working days after the day on which notice of the order is served on him, or

b

such shorter or longer period as may be specified in the order.

For this purpose a “working day” means any day other than a Saturday, Sunday or public holiday.

3

Where in Scotland the information mentioned in subsection (1) above relates to persons residing or having places of business at addresses situated in different sheriffdoms—

a

an application for an order may be made to the sheriff for the sheriffdom in which any of the addresses is situated, and

b

where the sheriff makes an order in respect of a person residing or having a place of business in his own sheriffdom, he may also make orders in respect of all or any of the other persons to whom the information relates (whether or not they have an address within the sheriffdom).

4

Schedule 1AA to this Act contains provisions supplementing this section.

2

After Schedule 1 to the [1970 c. 9.] Taxes Management Act 1970, insert the Schedule 1AA set out in Schedule 39 to this Act.

3

In section 20BB of that Act (falsification etc. of documents)—

a

in subsection (1)(a), after “above” insert “or an order under section 20BA above”;

b

in subsection (3), after “notice is given” insert “or the order is made”; and

c

after “notice”, in the second place where it occurs in that subsection, insert “or order”.

4

In section 20D(1) of that Act (meaning of “appropriate judicial authority”), after “20A” insert “, 20BA”.

150Search warrants: miscellaneous amendments

1

Section 20C of the [1970 c. 9.] Taxes Management Act 1970 (search warrants) is amended as follows.

2

After subsection (1) insert—

1AA

The Board shall not approve an application for a warrant under this section unless they have reasonable grounds for believing that use of the procedure under section 20BA above and Schedule 1AA to this Act (order for production of documents) might seriously prejudice the investigation.

3

After subsection (3) insert—

3A

In the case of any information contained in a computer which is information that—

a

an officer who enters the premises as mentioned in subsection (3) above has reasonable cause to believe may be required as evidence for the purposes mentioned in paragraph (b) of that subsection, and

b

is accessible from the premises,

the power of seizure under that subsection includes a power to require the information to be produced in a form in which it can be taken away and in which it is visible and legible.

4

For subsection (4) substitute—

4

Nothing in subsection (3) above authorises the seizure and removal of items subject to legal privilege.

4A

In subsection (4) “items subject to legal privilege” means—

a

communications between a professional legal adviser and his client or any person representing his client made in connection with the giving of legal advice to the client;

b

communications between a professional legal adviser and his client or any person representing his client or between such an adviser or his client or any such representative and any other person made in connection with or in contemplation of legal proceedings and for the purposes of such proceedings; and

c

items enclosed with or referred to in such communications and made—

i

in connection with the giving of legal advice; or

ii

in connection with or in contemplation of legal proceedings and for the purposes of such proceedings,

when they are in the possession of a person who is entitled to possession of them.

4B

Items held with the intention of furthering a criminal purpose are not subject to legal privilege.

5

After subsection (8) insert—

9

Where in Scotland the information mentioned in subsection (1) above relates to premises situated in different sheriffdoms—

a

petitions for the issue of warrants in respect of all the premises to which the information relates may be made to the sheriff for a sheriffdom in which any of the premises is situated, and

b

where the sheriff issues a warrant in respect of premises situated in his own sheriffdom, he shall also have jurisdiction to issue warrants in respect of all or any of the other premises to which the information relates.

This does not affect any power or jurisdiction of a sheriff to issue a warrant in respect of an offence committed within his own sheriffdom.

Provisions relating to government finance

151Debt Management Account

In Schedule 5A to the [1968 c. 13.] National Loans Act 1968 (the Debt Management Account), in paragraph 11, after sub-paragraph (1) (excess of Account’s liabilities over its assets to be liability of National Loans Fund) insert—

1A

The Treasury may pay from the National Loans Fund to the Debt Management Account an amount representing all or any of any excess mentioned in sub-paragraph (1) above, and if they do the liability there mentioned shall be extinguished or reduced accordingly.

152National Savings Bank

1

In section 4 of the [1971 c. 29.] National Savings Bank Act 1971 (deposits: limits and minimum balances), after subsection (3) insert—

4

Regulations under section 2 of this Act may include any provision that may be included in an order under this section.

2

In section 26 of that Act (regulations and orders etc.), for subsections (2) and (3) (parliamentary control of regulations under section 2 and orders under section 4) substitute—

2

A statutory instrument containing—

a

regulations under section 2 of this Act, or

b

an order under section 4 of this Act,

shall be subject to annulment in pursuance of a resolution of either House of Parliament.

3

If a draft of a statutory instrument containing an order under section 4 of that Act has been laid before Parliament, but the instrument has not been made, before the day on which this Act is passed, the instrument may be made either—

a

as if section 26 of that Act had not been amended by this section, or

b

in reliance on section 26(2) as substituted by this section.

The instrument shall be taken to be made as mentioned in paragraph (a) unless it states that it is made in reliance on section 26(2) as substituted by this section.

153National savings certificates

1

This section applies to a national savings certificate issued under section 12 of the [1968 c. 13.] National Loans Act 1968 if—

a

it was purchased on or before 7th October 1999, and

b

the fifth anniversary of its purchase falls after the day on which this Act is passed.

2

The power of the Treasury (under the prospectus under which the certificate was issued) to alter or end the extension terms for the certificate shall have effect as if it included power for the Treasury to decide before the fifth anniversary of the certificate’s purchase that the extension terms for the certificate are to involve it (so far as not cashed in) undergoing automatic roll-over on that anniversary.

3

Where a certificate undergoes automatic roll-over on any occasion, the Treasury has power to decide before the fifth anniversary of that occasion that the extension terms for the certificate are to involve it (so far as not cashed in) undergoing automatic roll-over on that anniversary.

4

For the purposes of this section a certificate undergoes “automatic roll-over” on an occasion if during the period of 5 years beginning with that occasion the certificate (so far as not cashed in) will earn interest as though it were a national savings certificate—

a

purchased on that occasion for a term of 5 years at a price equal to the value (rounded, if necessary, to the nearest penny) of the certificate on that occasion, and

b

earning such interest (whether at fixed rates or at rates that give effect to index-linking or partly one and partly the other) as has been decided by the Treasury before that occasion.

5

Subject to subsections (2) and (3), a certificate to which this section applies continues (so far as not cashed in) to be held on the terms of the prospectus under which it was issued.

However, any obligation of the Director of Savings to take steps to inform the holder of the certificate before the fifth anniversary of its purchase of what is to happen to the certificate after that anniversary extends to taking the corresponding steps in relation to the fifth anniversary of each occasion on which the certificate has undergone automatic roll-over.

6

Nothing in this section shall be taken as prejudicing the rights of the holder of a certificate to which this section applies to apply at any time to cash in the certificate.

7

References in this section to cashing in a certificate include reinvesting it.

154Exchange Equalisation Account

1

For section 4 of the [1979 c. 30.] Exchange Equalisation Account Act 1979 (examination and certification of the Account) substitute—

4Annual accounts

1

For each financial year in which the Account operates the Treasury shall prepare, in such form and on such basis as they may prescribe, accounts in relation to the transactions, assets and liabilities of the Account.

2

The Treasury shall send the accounts to the Comptroller and Auditor General not later than 30th November of the financial year following that to which the accounts relate.

3

The Comptroller and Auditor General shall examine and certify the accounts, issue a report on them and send the certified accounts and the report to the Treasury not later than 15th January of that year.

4

The Treasury shall lay the certified accounts and the report before each House of Parliament not later than 31st January of that year.

5

In certifying accounts under subsection (3) above the Comptroller and Auditor General shall state whether or not it is his opinion, having regard to his examination of the accounts, that—

a

the resources of the Account have been used in accordance with the provisions of this Act;

b

the transactions of the Account are in accordance with any relevant authority; and

c

the accounts have been prepared in the form, and on the basis, prescribed under subsection (1) above.

6

The Treasury may by order made by statutory instrument amend the date for the time being specified in any of subsections (2) to (4) above.

7

Before making an order under subsection (6) above the Treasury shall consult the Comptroller and Auditor General.

8

A statutory instrument containing an order under subsection (6) above shall be subject to annulment in pursuance of a resolution of the House of Commons.

9

In this section a reference to the use of resources is a reference to their expenditure, consumption or reduction in value.

2

This section applies in relation to the operation of the Exchange Equalisation Account in the financial year ending 31st March 2001 and subsequent financial years.

Supplementary provisions

155Interpretation

In this Act “the Taxes Act 1988” means the [1988 c. 1.] Income and Corporation Taxes Act 1988.

156Repeals

1

The enactments mentioned in Schedule 40 to this Act (which include provisions that are spent or of no practical utility) are repealed to the extent specified in the third column of that Schedule.

2

The repeals specified in that Schedule have effect subject to the commencement provisions and savings contained or referred to in the notes set out in that Schedule.

157Short title

This Act may be cited as the Finance Act 2000.

SCHEDULES

SCHEDULE 1Mixing of rebated light oils

Section 6.

Converting unleaded petrol into leaded petrol

1

1

In paragraph 1(1) of Schedule 2A to the [1979 c. 5.] Hydrocarbon Oil Duties Act 1979 (converting unleaded petrol into leaded petrol), before paragraph (a) insert—

aa

adding lead to unleaded petrol in respect of which duty has been charged at the rate specified in section 6(1A)(a);

2

In paragraph 8 of that Schedule (rate for mixtures of light oil), for sub-paragraph (2) substitute—

2

In the case of a mixture produced in contravention of paragraph 1 above, the rate is the rate in force under section 6(1A)(b) at the time the mixture is produced.

Converting unleaded petrol into higher octane unleaded petrol

2

1

In that Schedule, for paragraph 2 substitute—

Converting unleaded petrol into higher octane unleaded petrol

2

1

A mixture which is higher octane unleaded petrol is produced in contravention of this paragraph if it is produced by adding an octane enhancer to—

a

unleaded petrol in respect of which duty has been charged at the rate specified in section 6(1A)(a),

b

unleaded petrol in respect of which a rebate has been allowed under section 13A(1A)(b), or

c

a mixture of petrol within paragraph (a) or (b),

or by mixing higher octane unleaded petrol with any such petrol as is mentioned in paragraph (a), (b) or (c).

2

This paragraph is subject to any direction given under paragraph 3.

2

In paragraph 8 of that Schedule (rate for mixtures of light oil), for sub-paragraph (3) substitute—

3

In the case of a mixture produced in contravention of paragraph 2 above, the rate is the rate produced by deducting from the rate referred to in sub-paragraph (2) the rate of rebate which at that time is in force under section 13A(1A)(a) of this Act.

Mixing different kinds of unleaded petrol

3

1

After paragraph 2 of that Schedule insert—

Mixing different kinds of unleaded petrol

2A

1

A mixture which is unleaded petrol is produced in contravention of this paragraph if the mixture is produced by mixing unleaded petrol of any two or more of the following descriptions—

a

petrol on which duty has been paid at the rate specified in section 6(1A)(a),

b

petrol in respect of which a rebate has been allowed under section 13A(1A)(b),

c

petrol in respect of which a rebate has been allowed under section 13A(1A)(a),

where the mixture produced is petrol of a description subject to a higher effective rate of duty than one or more of the ingredients of the mixture.

2

The comparison required by sub-paragraph (1) shall be made by reference to the effective rates of duty in force at the time the mixture is produced.

3

This paragraph is subject to any direction given under paragraph 3.

2

In paragraph 3 of that Schedule, for “paragraph 1 above or (as the case may be) paragraph 2 above” substitute “paragraph 1, 2 or 2A above”.

3

In paragraph 8 of that Schedule, after sub-paragraph (3) insert—

3A

In the case of a mixture produced in contravention of paragraph 2A above, the rate is—

a

in the case of a mixture that is higher octane unleaded petrol, the rate produced by deducting from the rate in force under section 6(1A)(b) at the time the mixture is produced the rebate which at that time is in force under section 13A(1A)(a);

b

in the case of a mixture that is neither higher octane unleaded petrol nor ultra low sulphur petrol, the rate produced by deducting from the rate in force under section 6(1A)(b) at the time the mixture is produced the rebate which at that time is in force under section 13A(1A)(b).

4

In paragraph 10 of that Schedule, make the existing provision sub-paragraph (1), at the beginning insert “Subject to sub-paragraph (2),” and after it insert—

2

Sub-paragraph (1) does not apply in the case of any such mixture as is mentioned in paragraph 8(3A)(b) as regards the duty paid in respect of any ingredient in the mixture that is subject to a higher effective rate of duty than the resulting mixture.

Interpretation

4

In paragraph 11 of that Schedule, make the existing provision sub-paragraph (1) and after it insert—

2

References in this Schedule to the effective rate of duty, in relation to petrol of any description, are to the rate of duty in force reduced by any applicable rebate.

SCHEDULE 2Amusement machine licence duty

Section 17.

Introduction

1

The [1981 c. 63.] Betting and Gaming Duties Act 1981 is amended as follows.

Exceptions from requirement to be licensed

2

In section 21(3A) (types of amusement machine excepted from requirement to be licensed) in paragraph (b) (five-penny machine which is a small-prize machine) for “five-penny machine” substitute “ten-penny machine”.

Amusement machine licence duty

3

1

In section 22(2) (definition of small-prize machines)—

a

after “Act” insert “(a)”;

b

for “£15” substitute “£8”; and

c

at the end insert—

b

an amusement machine is a medium-prize machine if it is a prize machine and the value or aggregate value of the benefits in money or money’s worth, which any player who is successful in a single game played by means of the machine may receive, can exceed £8 but cannot exceed £15.

2

In section 22(3) (power of Commissioners to amend the sum mentioned in the definition of prize machines), for “the sum” substitute “a sum”.

Amount of duty

4

1

In section 23(2) (amount of duty)—

a

in paragraph (b) for “column 2, column 3 or column 4 of the Table” substitute “Category A, Category B, Category C, Category D or Category E”;

b

for “the rate in column 2, the rate in column 3, or the rate in column 4” substitute “the rate for the category of machine in question in column 2, 3, 4, 5 or 6 of the Table”;

c

for the Table substitute—

TABLE

(1)

(2)

(3)

(4)

(5)

(6)

Period (in months) for which licence granted

Category A

Category B

Category C

Category D

Category E

£

£

£

£

£

1

30

80

80

165

220

2

50

150

160

320

425

3

75

220

230

470

615

4

95

285

300

605

800

5

120

345

360

735

970

6

140

400

420

855

1,125

7

160

450

475

965

1,270

8

185

500

525

1,065

1,405

9

205

540

570

1,155

1,525

10

225

580

610

1,240

1,635

11

240

615

650

1,310

1,730

12

250

645

680

1,375

1,815

2

At the end of section 23 insert—

3

The machines comprised in each category referred to in this section are as follows—

Category A: any machine which is not a gaming machine;

Category B: any gaming machine which is a small-prize machine or five-penny machine;

Category C: any gaming machine which is a medium-prize machine, unless it is also a five-penny machine;

Category D: any gaming machine which is a ten-penny machine, unless it is also—

a

a five-penny machine,

b

a small-prize machine, or

c

a medium-prize machine;

Category E: any machine which is not in any other category.

Meaning of amusement machine

5

1

In section 25 (meaning of amusement machine), in paragraph (b) of subsection (1B) (meaning of video machine) omit “, other than one consisting only in a blank surface onto which light is projected”.

2

In that section, in subsection (7) (application of provisions to a machine that falls to be treated as more than one machine) omit the word “or” at the end of paragraph (c) and after that paragraph insert—

cc

medium-prize machines,

cd

ten-penny machines, or

Supplementary provisions

6

In section 26(2) (definitions), after the definition of “five-penny machine” insert—

ten-penny machine” means an amusement machine which can only be played by the insertion into the machine of coins of a denomination, or aggregate denomination, not exceeding 10p;

Paragraphs 2 to 6: commencement

7

1

Paragraphs 2 to 4, 5(2) and 6 shall have effect in relation to any amusement machine licence for which an application is received by the Commissioners of Customs and Excise after 4th August 2000.

2

Paragraph 5(1) shall have effect on and after the day on which this Act is passed.

Seasonal licences: duration

8

1

Amend paragraph 4 of Schedule 4 as follows.

2

In sub-paragraph (2) (which provides for a seasonal licence to remain in force during October of the year for which it is granted) for the words from “during October of that year” to the end substitute

the provision of that number of relevant machines on the premises during the period in that year—

a

beginning with 1st October; and

b

ending with the Sunday before the first Monday in November.

3

In sub-paragraph (8) (meaning of “winter period”) for “November to February” substitute “the period beginning with the first Monday in November and ending with the last day of February”.

4

Sub-paragraph (2) applies in relation to any licence expressed to be granted for a period beginning with 1st April in 2000 or any subsequent year.

5

Sub-paragraph (3) has effect for determining what was comprised in the winter period beginning in 1999, and for determining what is comprised in any subsequent winter period.

Unlicensed amusement machines: duty chargeable

9

After section 24 insert—

24AUnlicensed machines: duty chargeable

Schedule 4A to this Act (which provides for the recovery of amusement machine licence duty in relation to unlawfully unlicensed machines) shall have effect.

10

1

After Schedule 4 insert—

Schedule 4AUnlicensed amusement machines

Application

1

This Schedule applies where it appears to the Commissioners that an amusement machine is or was provided for play on premises in contravention of section 21(1) or 24(3) or (4) of this Act.

Default notice requesting production of licence

2

1

The Commissioners may give a notice which complies with the requirements of sub-paragraphs (3) and (4) below.

2

In this Schedule such a notice is referred to as a “default notice”.

3

The notice shall state that one or more amusement machines appear to have been provided for play on specified premises (“relevant premises”) during a specified period (the “alleged default period”)—

a

the first day of which falls not more than three years before the date of the notice, and

b

the last day of which falls on or before the date of the notice.

4

The notice shall request the production to the Commissioners on or before a specified date (the “due date”) of every relevant amusement machine licence.

5

For the purposes of sub-paragraph (4) above an amusement machine licence is a relevant licence if, at any time during the alleged default period, it was in force in relation to an amusement machine provided for play on the relevant premises at that time.

6

A single default notice may relate to—

a

different alleged default periods, or

b

different relevant premises.

7

A default notice shall be deemed to have been given if it is—

a

left at, or posted to, the relevant premises, or

b

given to, or posted to or left at the proper address of one or more persons falling within sub-paragraph (8) below.

8

Those persons are—

a

one or more of the persons who are or appear to be, or who at any time during the alleged default period were or appear to have been, responsible persons in relation to the relevant premises or an amusement machine provided for play on those premises, or

b

any person who is the representative of such a person.

Failure to produce a licence: grant of default licence

3

1

In any case where—

a

the Commissioners give a default notice,

b

the due date specified in the notice passes, and

c

it appears to the Commissioners that at some time during the alleged default period specified in the notice one or more amusement machines were provided for play on the relevant premises so specified without an amusement machine licence being in force in relation to the machines,

the Commissioners may grant, in accordance with this paragraph, one or more licences in relation to each of the machines.

2

In this Schedule—

default licence” means a licence granted by the Commissioners under sub-paragraph (1) above;

unlicensed machine” means a machine in relation to which a default licence is granted by the Commissioners.

3

The Commissioners may grant a separate default licence for each period of consecutive days—

a

which falls within the alleged default period, and

b

for which no amusement machine licence in force in relation to the unlicensed machine was produced.

4

The Commissioners may grant a default licence in relation to an unlicensed machine even though the period of that licence would include a day or days when the unlicensed machine was provided for play in contravention of section 21(1) or 24(3) or (4) of this Act on premises other than the relevant premises specified in the applicable default notice.

5

In a case where the Commissioners grant a default licence in accordance with sub-paragraph (4) above, references in this Schedule to the relevant premises shall be construed in relation to any particular time as references to the premises on which the machine was provided for play at that time.

6

The Commissioners may grant a default licence even though no application has been made for it.

7

A default licence may be granted for a period of any length (whether or not a licence under Schedule 4 to this Act could be granted for a period of that length).

Assessment of amount equivalent to duty

4

1

This paragraph applies where a default licence is granted in relation to an unlicensed machine.

2

The Commissioners may, subject to the following provisions of this paragraph, assess to the best of their judgement the amount which would have been payable under this Act as amusement machine licence duty if the default licence had been an amusement machine licence granted under Schedule 4 to this Act.

3

The Commissioners shall make the assessment using the rates of amusement machine licence duty which apply in relation to amusement machine licences granted in consequence of applications received by the Commissioners on the due date.

4

If the period of the licence is 12 months or less, the assessment shall be made as if an amusement machine licence had been granted in relation to the unlicensed machine for that period.

5

If the period of the licence is longer than 12 months, the assessment shall be made as if—

a

a separate amusement machine licence had been granted in relation to the unlicensed machine for each complete period of 12 months falling wholly within the period of the licence, and

b

a further amusement machine licence had been granted in relation to the unlicensed machine for any remaining part of the period of the licence.

6

Sub-paragraphs (7) and (8) below shall apply in relation to an assessment to be made in any case where—

a

the period of a licence mentioned in sub-paragraph (4) above, or

b

the part of the period mentioned in sub-paragraph (5)(b) above,

is not a period of complete months.

7

Any period of less than a month comprised in the period or the part of the period shall be treated as a complete month; and accordingly the period or the part of the period in question shall be treated as if it consisted of a complete month or, as the case may be, complete months.

8

The amusement machine licence treated as granted for such a period, or for such a part of a period, shall be treated as having been—

a

granted for that period, or that part of the period, as extended in accordance with sub-paragraph (7) above, and

b

surrendered at the end of the last day of the period mentioned in sub-paragraph (4) above or, as the case may be, of the part of the period mentioned in sub-paragraph (5)(b) above.

Liability to pay

5

1

Where an amount has been assessed under paragraph 4 above and notified to a responsible person or his representative, that amount—

a

shall be deemed to be an amount of duty charged in accordance with section 22 of this Act on an amusement machine licence within the meaning of section 21 of this Act,

b

shall be due from the responsible person, and

c

may be recovered accordingly unless, or except to the extent that, the assessment has subsequently been withdrawn or reduced.

2

The responsible persons to whom an assessment may be notified are any one or more of the persons who are or appear to be, or at any time during the period to which the assessment relates were or appear to have been, responsible persons in relation to the unlicensed machine or the relevant premises.

3

An assessment shall be deemed to have been notified to a person if it is—

a

given to him, or

b

left at or posted to his proper address.

4

But an assessment shall not be deemed to have been notified to a person unless and until—

a

the default licence in relation to which the assessment has been made, or

b

a copy of that licence,

has been given to him, or left at or posted to his proper address.

5

Where an amount has been assessed and notified to more than one responsible person (or his representative), that amount shall be recoverable jointly and severally from any or all of the responsible persons.

6

Arrangements made in accordance with paragraph 7A of Schedule 4 to this Act do not apply in relation to an amount assessed and notified in accordance with this paragraph.

Reviews and time limits on recovery

6

1

Section 14 of the [1994 c. 9.] Finance Act 1994 (reviews of decisions) shall apply to so much of any decision by the Commissioners as is of any of the kinds mentioned in sub-paragraph (2) below, as it applies to the decisions mentioned in subsection (1) of that section.

2

Those decisions are—

a

any decision that a default licence should be granted,

b

any decision contained in an assessment under paragraph 4 above that a person is liable to pay an amount of duty, and

c

any decision contained in an assessment under paragraph 4 above as to the amount of a person’s liability.

3

Sub-paragraph (4) below applies where the Commissioners—

a

have given a default notice, and

b

in consequence of so doing have granted a default licence.

4

An assessment made under paragraph 4 above in relation to the default licence may not be notified to a responsible person (or his representative) at any time after the end of the period of one year beginning with the due date specified in the default notice.

5

The reference to three years in paragraph 2(3)(a) above shall have effect as if it were a reference to twenty years in any case where sub-paragraph (6) or (7) below applies.

6

This sub-paragraph applies where an amusement machine has been provided for play in circumstances where a person—

a

has, by virtue of conduct engaged in for the purpose of evading any amount of amusement machine licence duty, become liable to a penalty under section 8 of the Finance Act 1994, or

b

has been convicted of an offence under section 24(6) of this Act.

7

This sub-paragraph applies where an amusement machine has been provided for play in circumstances where proceedings for an offence under section 24(6) of this Act would have been commenced or continued against a person (whether or not the person assessed), but for their having been compounded under section 152(a) of the [1979 c. 2.] Customs and Excise Management Act 1979.

General interpretation

7

1

The following provisions of this paragraph apply for the purposes of this Schedule.

2

A person is a responsible person in relation to an amusement machine at a particular time if, at that time, he is or was—

a

the owner or hirer of the machine, or

b

a party to any contract under which the machine may be, or may have been, or is or was required to be, on the relevant premises at that time.

3

A person is a responsible person in relation to relevant premises at a particular time if, at that time, he is or was—

a

the owner, lessee or occupier of the premises, or

b

responsible to the owner, lessee or occupier for the management of the premises, or

c

responsible for issuing or exchanging coins or tokens for use in playing any amusement machine on the premises, or otherwise for controlling the use of any such machine, or

d

responsible for controlling the admission of persons to the premises or for providing persons resorting to the premises with any goods or services.

4

A person’s representative is—

a

his personal representative,

b

his trustee in bankruptcy,

c

any receiver or liquidator appointed in relation to him or any of his property, or

d

any other person acting in a representative capacity in relation to him.

5

The proper address of a person is—

a

in the case of a body corporate, its registered office or principal office, and

b

in any other case—

i

his last known place of abode or business, or

ii

any vessel or aircraft to which he may belong or have lately belonged.

6

An item is only to be treated as posted to an address or place if it has been sent there by registered post or the recorded delivery service.

Saving for liability

8

The grant of a default licence in relation to an unlicensed machine shall be without prejudice to any liability arising under section 24 of this Act in relation to the machine.

2

This paragraph has effect in relation to amusement machines which appear to the Commissioners of Customs and Excise to have been provided for play on premises in contravention of section 21(1) or 24(3) or (4) of the [1981 c. 63.] Betting and Gaming Duties Act 1981 on or after the day falling three years before the day on which this Act is passed.

SCHEDULE 3Vehicle excise duty on new cars and vans

Section 22.

After Part I of Schedule 1 to the [1994 c. 22.] Vehicle Excise and Registration Act 1994, insert—

Part IALight passenger vehicles: graduated rates of duty

Vehicles to which this Part applies

1A

1

This Part of this Schedule applies to a vehicle which—

a

is first registered on or after 1st March 2001, and

b

is so registered on the basis of an EC certificate of conformity or UK approval certificate that—

i

identifies the vehicle as having been approved as a light passenger vehicle, and

ii

specifies a CO2 emissions figure in terms of grams per kilometre driven.

2

In sub-paragraph (1)(b)(i) a “light passenger vehicle” means a vehicle within Category M1 of Annex II to Council Directive 70/156/EEC (vehicle with at least four wheels used for carriage of passengers and comprising no more than 8 seats in addition to the driver’s seat).

3

For the purposes of this Part of this Schedule “the applicable CO2 emissions figure” is—

a

where the EC certificate of conformity or UK approval certificate specifies only one CO2 emissions figure, that figure, and

b

where it specifies more than one, the figure specified as the CO2 emissions (combined) figure.

4

Where the car is registered on the basis of an EC certificate of conformity, or UK approval certificate, that specifies separate CO2 emissions figures in terms of grams per kilometre driven for different fuels, “the applicable CO2 emissions figure” is the lowest figure specified or, in a case within sub-paragraph (3)(b), the lowest CO2 emissions (combined) figure specified.

5

If a vehicle is on first registration a vehicle to which this Part of this Schedule applies—

a

its status as such a vehicle, and

b

the applicable CO2 emissions figure,

are not affected by any subsequent modification of the vehicle.

Graduated rates of duty

1B

The annual rate of vehicle excise duty applicable to a vehicle to which this Part of this Schedule applies shall be determined in accordance with the following table by reference to—

a

the applicable CO2 emissions figure, and

b

whether the vehicle qualifies for the reduced rate of duty, or is liable to the standard rate or the premium rate of duty.

CO2 emissions figure

Rate

(1)

(2)

(3)

(4)

(5)

Exceeding

Not Exceeding

Reduced rate

Standard rate

Premium rate

g/km

g/km

£

£

£

150

90

100

110

150

165

110

120

130

165

185

130

140

150

185

150

155

160

The reduced rate

1C

1

A vehicle qualifies for the reduced rate of duty if condition A, B or C below is met.

2

Condition A is that the vehicle is constructed or modified—

a

so as to be propelled by a prescribed type of fuel, or

b

so as to be capable of being propelled by any of a number of prescribed types of fuel,

and complies with any other requirements prescribed for the purposes of this condition.

3

Condition B is that the vehicle—

a

incorporates before its first registration equipment enabling it to meet such vehicle emission standards as may be prescribed for the purposes of this condition, and

b

has incorporated such equipment since its first registration.

4

Condition C is that the vehicle is of a description certified by the Secretary of State, before the vehicle’s first registration, as meeting such vehicle emission standards as may be prescribed for the purposes of this condition.

5

The Secretary of State may make provision by regulations—

a

for the making of an application to the Secretary of State for the issue of a certificate under sub-paragraph (4);

b

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

c

for the examination of one or more vehicles of the description to which the application relates, for the purposes of the determination mentioned in paragraph (b), by such persons, and in such manner, as may be prescribed;

d

for a fee to be paid for such an examination;

e

for the form and content of such a certificate;

f

for the revocation, cancellation or surrender of such a certificate;

g

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

h

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

The standard rate

1D

A vehicle is liable to the standard rate of duty if it does not qualify for the reduced rate and is not liable to the premium rate.

The premium rate

1E

1

A vehicle is liable to the premium rate of duty if—

a

it is constructed or modified so as to be propelled solely by diesel, and

b

it is not of a prescribed description.

2

In sub-paragraph (1)(a) “diesel” means any diesel fuel within the definition in Article 2 of Directive 98/70/EC of the European Parliament and of the Council.

Meaning of “prescribed”

1F

In this Part of this Schedule “prescribed” means prescribed by regulations made by the Secretary of State with the consent of the Treasury.

Meaning of “EC certificate of conformity” and “UK approval certificate”

1G

1

References in this Part of this Schedule to an “EC certificate of conformity” are to a certificate of conformity issued by a manufacturer under any provision of the law of a Member State implementing Article 6 of Council Directive 70/156/EEC, as amended.

2

References in this Part of this Schedule to a “UK approval certificate” are to a certificate issued under—

a

section 58(1) or (4) of the [1988 c. 52.] Road Traffic Act 1988, or

b

Article 31A(4) or (5) of the [S.I. 1981/154 (N.I. 1).] Road Traffic (Northern Ireland) Order 1981.

Part IBLight goods vehicles

Vehicles to which this Part applies

1H

1

This Part of this Schedule applies to a vehicle which—

a

is first registered on or after 1st March 2001, and

b

is so registered on the basis of an EC certificate of conformity or UK approval certificate that identifies the vehicle as having been approved as a light goods vehicle.

2

In sub-paragraph (1)(b) a “light goods vehicle” means a vehicle within Category N1 of Annex II to Council Directive 70/156/EEC (vehicle with four or more wheels used for carriage of goods and having a maximum mass not exceeding 3.5 tonnes).

3

If a vehicle is on first registration a vehicle to which this Part of this Schedule applies its status as such a vehicle is not affected by a subsequent modification of the vehicle.

4

In this paragraph “EC certificate of conformity” and “UK approval certificate” have the same meaning as in Part IA of this Schedule.

Annual rate of duty

1J

The annual rate of vehicle excise duty applicable to a vehicle to which this Part of this Schedule applies is £160.

SCHEDULE 4Vehicle excise duty: enforcement provisions for graduated rates

Section 23.

Introduction

1

1

This Schedule applies to vehicles in respect of which different rates of vehicle excise duty are, under the provisions listed below, chargeable in respect of vehicles by reference to characteristics of the vehicle.

2

The provisions referred to in sub-paragraph (1) are—

Part I of Schedule 1 to the [1994 c. 22.] Vehicle Excise and Registration Act 1994 (the general rate),

Part IA of that Schedule (graduated rates for light passenger vehicles first registered on or after 1st March 2001), or

Part II of that Schedule (motorcycles).

Particulars to be furnished on application for licence

2

1

The Secretary of State may make provision by regulations as to the particulars to be furnished on an application for a vehicle licence in respect of a vehicle to which this Schedule applies.

2

The regulations may make different provision for different descriptions of vehicle and different descriptions of licence.

3

The prescribed particulars may include—

a

particulars other than those required for the purposes of vehicle excise duty, and

b

particulars other than with respect to the vehicle in respect of which the licence is to be taken out.

4

Every person making an application with respect to which regulations under this paragraph are in force shall—

a

furnish such particulars as may be prescribed by the regulations, and

b

make such a declaration as may be specified by the Secretary of State.

5

A person applying for a licence need not make the declaration specified for the purposes of sub-paragraph (4)(b) if he agrees to comply with such conditions as may be specified in relation to him by the Secretary of State.

The conditions which may be specified include—

a

a condition that the prescribed particulars are furnished by being transmitted to the Secretary of State by such electronic means as he may specify; and

b

a condition requiring such payments as may be specified by the Secretary of State to be made to him in respect of—

i

steps taken by him for facilitating compliance by any person with any condition falling within paragraph (a); and

ii

in such circumstances as may be so specified, the processing of applications for vehicle licences where particulars are transmitted in accordance with that paragraph.

6

In relation to applications with respect to which regulations under this paragraph are in force, the preceding provisions of this paragraph have effect in place of the provisions of subsections (1) to (3B) of section 7 of the [1994 c. 22.] Vehicle Excise and Registration Act 1994.

Power to require evidence in support of application

3

The Secretary of State may make provision by regulations—

a

requiring an application for a vehicle licence in respect of a vehicle to which this Schedule applies to be supported by such documentary or other evidence as may be specified in the regulations, and

b

authorising him to refuse to issue the licence applied for if such evidence is not provided.

Powers exercisable where licence issued on basis of incorrect application

4

The powers conferred by paragraphs 5 to 11 below are exercisable in a case where—

a

a vehicle licence is issued to a person on the basis of an application stating that the vehicle—

i

is a vehicle to which this Schedule applies, or

ii

is a vehicle to which this Schedule applies in respect of which a particular amount of vehicle excise duty falls to be paid, and

b

the vehicle is not such a vehicle or, as the case may be, is one in respect of which duty falls to be paid at a higher rate.

Power to declare licence void

5

The Secretary of State may by notice sent by post to the person inform him that the licence is void as from the time when it was granted.

If he does so, the licence shall be void as from the time when it was granted.

Power to require payment of balance of duty

6

1

The Secretary of State may by notice sent by post to the person require him to secure that the additional duty payable is paid within such reasonable period as is specified in the notice.

2

If that requirement is not complied with, the Secretary of State may by notice sent by post to the person inform him that the licence is void as from the time when it was granted.

If he does so, the licence shall be void as from the time when it was granted.

Power to require delivery up of licence

7

The Secretary of State may in a notice under paragraph 5 or 6(2) require the person to whom it is sent to deliver up the licence within such reasonable period as is specified in the notice.

Power to require delivery up of licence and payment in respect of duty

8

1

The Secretary of State may in a notice under paragraph 5 or 6(2) require the person to whom it is sent—

a

to deliver up the licence within such reasonable period as is specified in the notice, and

b

on doing so to pay an amount equal to the monthly duty shortfall for each month, or part of a month, in the relevant period.

2

The “monthly duty shortfall” means one-twelfth of the difference between—

a

the duty that would have been payable for a licence for a period of twelve months if the vehicle had been correctly described in the application, and

b

that duty payable in respect of such a licence on the basis of the description in the application as made.

For this purpose the amount of the duty payable shall be ascertained by reference to the rates in force at the beginning of the relevant period.

Failure to deliver up licence

9

1

A person who—

a

is required by notice under paragraph 7 or 8(1)(a) above to deliver up a licence, and

b

fails to comply with the requirement contained in the notice,

commits an offence.

2

A person committing such an offence is liable on summary conviction to a penalty not exceeding whichever is the greater of—

a

level 3 on the standard scale, and

b

five times the annual duty shortfall.

3

The “annual duty shortfall” means the difference between—

a

the duty that would have been payable for a licence for a period of twelve months if the vehicle had been correctly described in the application, and

b

that duty payable in respect of a licence for a period of twelve months in respect of the vehicle as described in the application.

For this purpose the amount of the duty payable shall be ascertained by reference to the rates in force at the beginning of the relevant period.

Failure to deliver up licence: additional liability

10

1

Where a person has been convicted of an offence under paragraph 9, the court shall (in addition to any penalty which it may impose under that paragraph) order him to pay an amount equal to the monthly duty shortfall for each month, or part of a month, in the relevant period (or so much of the relevant period as falls before the making of the order).

2

In sub-paragraph (1) the “monthly duty shortfall” has the meaning given by paragraph 8(2).

3

Where—

a

a person has been convicted of an offence under paragraph 9, and

b

a requirement to pay an amount with respect to that licence has been imposed on that person by virtue of paragraph 8(1)(b),

the order to pay an amount under this paragraph has effect instead of that requirement and the amount to be paid under the order shall be reduced by any amount actually paid in pursuance of the requirement.

Meaning of the “relevant period”

11

References in this Schedule to the “relevant period” are to the period—

a

beginning with the first day of the period for which the licence was applied for or, if later, the day on which the licence first was to have effect, and

b

ending with whichever is the earliest of the following times—

i

the end of the month during which the licence was required to be delivered up;

ii

the end of the month during which the licence was actually delivered up;

iii

the date on which the licence was due to expire;

iv

the end of the month preceding that in which there first had effect a new vehicle licence for the vehicle in question.

Construction and effect

12

1

This Schedule and the [1994 c. 22.] Vehicle and Excise Registration Act 1994 shall be construed and have effect as if this Schedule were contained in that Act.

2

References in any other enactment to that Act shall be construed and have effect accordingly as including references to this Schedule.

SCHEDULE 5Rates of vehicle excise duty on goods vehicles

Section 24.

1

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

2

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

Revenue weight of vehicle

Rate

(1)

(2)

(3)

(4)

(5)

Exceeding

Not Exceeding

Two axle vehicle

Three axle vehicle

Four or more axle vehicle

kgs

kgs

£

£

£

3,500

7,500

165

165

165

7,500

12,000

300

300

300

12,000

13,000

470

490

350

13,000

14,000

650

490

350

14,000

15,000

840

490

350

15,000

17,000

1,320

490

350

17,000

19,000

1,600

850

350

19,000

21,000

1,600

1,020

350

21,000

23,000

1,600

1,470

510

23,000

25,000

1,600

2,230

830

25,000

27,000

1,600

2,340

1,470

27,000

29,000

1,600

2,340

2,320

29,000

31,000

1,600

2,340

3,360

31,000

44,000

1,600

2,340

4,400

3

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

Revenue weight of vehicle

Rate

(1)

(2)

(3)

(4)

(5)

Exceeding

Not Exceeding

Two axle vehicle

Three axle vehicle

Four or more axle vehicle

kgs

kgs

£

£

£

3,500

7,500

160

160

160

7,500

12,000

160

160

160

12,000

13,000

160

160

160

13,000

14,000

160

160

160

14,000

15,000

160

160

160

15,000

17,000

320

160

160

17,000

19,000

600

160

160

19,000

21,000

600

160

160

21,000

23,000

600

470

160

23,000

25,000

600

1,230

160

25,000

27,000

600

1,340

470

27,000

29,000

600

1,340

1,320

29,000

31,000

600

1,340

2,360

31,000

44,000

600

1,340

3,400

4

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

Revenue weight of tractive unit

Rate for tractive unit with two axles

Rate for tractive unit with three or more axles

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

Exceeding

Not exceeding

Any no. of semi-trailer axles

2 or more semi-trailer axles

3 or more semi-trailer axles

Any no. of semi-trailer axles

2 or more semi-trailer axles

3 or more semi-trailer axles

kgs

kgs

£

£

£

£

£

£

3,500

7,500

165

165

165

165

165

165

7,500

12,000

300

300

300

300

300

300

12,000

16,000

460

460

460

460

460

460

16,000

20,000

520

460

460

460

460

460

20,000

23,000

810

460

460

460

460

460

23,000

26,000

1,190

590

460

590

460

460

26,000

28,000

1,190

1,130

460

1,130

460

460

28,000

31,000

1,740

1,740

1,090

1,740

660

460

31,000

33,000

2,530

2,530

1,740

2,530

1,000

460

33,000

34,000

5,170

5,170

1,740

2,530

1,470

570

34,000

35,000

5,170

5,170

2,340

2,530

2,100

860

35,000

36,000

6,750

6,750

2,340

2,530

2,100

860

36,000

38,000

9,250

9,250

2,710

2,820

2,820

1,280

38,000

41,000

9,250

9,250

3,950

3,750

4,250

2,500

41,000

44,000

9,250

9,250

3,950

7,250

7,250

2,950

5

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

Revenue weight of tractive unit

Rate for tractive unit with two axles

Rate for tractive unit with three or more axles

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

Exceeding

Not exceeding

Any no. of semi-trailer axles

2 or more semi-trailer axles

3 or more semi-trailer axles

Any no. of semi-trailer axles

2 or more semi-trailer axles

3 or more semi-trailer axles

kgs

kgs

£

£

£

£

£

£

3,500

7,500

160

160

160

160

160

160

7,500

12,000

160

160

160

160

160

160

12,000

16,000

160

160

160

160

160

160

16,000

20,000

160

160

160

160

160

160

20,000

23,000

160

160

160

160

160

160

23,000

26,000

190

160

160

160

160

160

26,000

28,000

190

160

160

160

160

160

28,000

31,000

740

740

160

740

160

160

31,000

33,000

1,530

1,530

740

1,530

160

160

33,000

34,000

4,170

4,170

740

1,530

470

160

34,000

35,000

4,170

4,170

1,340

1,530

1,100

160

35,000

36,000

5,750

5,750

1,340

1,530

1,100

160

36,000

38,000

8,250

8,250

1,710

1,820

1,820

280

38,000

41,000

8,250

8,250

2,950

2,750

3,250

1,500

41,000

44,000

8,250

8,250

2,950

6,250

6,250

1,950

6

1

In the following provisions—

a

in paragraph 11(1), after “Subject to sub-paragraphs (2) and (3)”, and

b

in paragraph 11A(2), after “Subject to sub-paragraph (3)”,

insert “and paragraph 11C”.

2

After paragraph 11B insert—

11C

1

This paragraph applies to a tractive unit that—

a

has a revenue weight exceeding 41,000 kilograms but not exceeding 44,000 kilograms,

b

has 3 or more axles and is used exclusively for the conveyance of semi-trailers with 3 or more axles,

c

is of a type that could lawfully be used on a public road immediately before 21st March 2000, and

d

complies with the requirements in force immediately before that date for use on a public road.

2

The annual rate of vehicle excise duty applicable to a vehicle to which this paragraph applies is—

a

in the case of a vehicle with respect to which the reduced pollution requirements are not satisfied, £1,280;

b

in the case of a vehicle with respect to which those requirements are satisfied, £280.

SCHEDULE 6Climate change levy

Section 30.

Part IThe levy

Climate change levy

1

1

A tax to be known as climate change levy (“the levy”) shall be charged in accordance with this Schedule.

2

The levy is under the care and management of the Commissioners of Customs and Excise.

Levy charged on taxable supplies

2

1

The levy is charged on taxable supplies.

2

Any supply of a taxable commodity is a taxable supply, subject to the provisions of Part II of this Schedule.

Meaning of “taxable commodity”

3

1

The following are taxable commodities for the purposes of this Schedule, subject to sub-paragraph (2) and to any regulations under sub-paragraph (3)—

a

electricity;

b

any gas in a gaseous state that is of a kind supplied by a gas utility;

c

any petroleum gas, or other gaseous hydrocarbon, in a liquid state;

d

coal and lignite;

e

coke, and semi-coke, of coal or lignite;

f

petroleum coke.

2

The following are not taxable commodities—

a

hydrocarbon oil or road fuel gas within the meaning of the [1979 c. 5.] Hydrocarbon Oil Duties Act 1979;

b

waste within the meaning of Part II of the [1990 c. 5.] Environmental Protection Act 1990 or the meaning given by Article 2(2) of the [S.I. 1997/2778 (N.I. 19).] Waste and Contaminated Land (Northern Ireland) Order 1997.

3

The Treasury may by regulations provide that a commodity of a description specified in the regulations is, or is not, a taxable commodity for the purposes of this Schedule.

Part IITaxable supplies

Introduction

4

1

A supply of a taxable commodity (or part of such a supply) is a taxable supply for the purposes of the levy if levy is chargeable on the supply under—

paragraph 5 (supplies of electricity),

paragraph 6 (supplies of gas), or

paragraph 7 (other supplies in course or furtherance of business),

and the supply (or part) is not excluded under paragraphs 8 to 10 or exempt under paragraphs 11 to 22.

2

In this Schedule—

a

references to a supply of a taxable commodity include a supply that is deemed to be made under paragraph 23, and

b

references to a taxable supply include a supply that is deemed to be made under paragraph 24,

but paragraphs 23 and 24 have effect subject to any exceptions provided for under paragraph 21.

Supplies of electricity

5

1

Levy is chargeable on a supply of electricity if—

a

the supply is made by an electricity utility, and

b

the person to whom the supply is made—

i

is not an electricity utility, or

ii

is the utility itself.

2

Levy is chargeable on a supply made from a combined heat and power station of electricity produced in the station if—

a

the station is a partly exempt combined heat and power station,

b

the supply is not one that is deemed to be made under paragraph 23(3) (self-supply by producer), and

c

the person to whom the supply is made is not an electricity utility.

3

Levy is chargeable on a supply of electricity that is deemed to be made under paragraph 23(3).

4

Except as provided by sub-paragraphs (1) to (3), levy is not chargeable on a supply of electricity.

Supplies of gas

6

1

Levy is chargeable on a supply of any gas if—

a

the supply is made by a gas utility, and

b

the person to whom the supply is made—

i

is not a gas utility, or

ii

is the utility itself.

2

Levy is chargeable on a supply of gas that is deemed to be made under paragraph 23(3) (self-supply by producer) if the gas—

a

is held in a gaseous state immediately prior to being released for burning, and

b

is of a kind supplied by a gas utility.

3

Except as provided by sub-paragraphs (1) and (2), levy is not chargeable on a supply of any gas that is supplied in a gaseous state.

Other supplies made in course or furtherance of business

7

1

This paragraph applies to a supply of a taxable commodity other than—

a

electricity, or

b

gas in a gaseous state.

2

Levy is chargeable on any such supply if the supply is made in the course or furtherance of a business.

Excluded supplies: supply for domestic or charity use

8

1

A supply is excluded from the levy if it is—

a

for domestic use (see paragraph 9), or

b

for charity use.

2

For the purposes of this paragraph, a supply is for charity use if the commodity supplied is for use by a charity otherwise than in the course or furtherance of a business.

3

If a supply is partly for domestic or charity use and partly not, the part of the supply that is for domestic or charity use is excluded from the levy.

4

Where a supply of a commodity is partly for domestic or charity use and partly not—

a

if at least 60 per cent. of the commodity is supplied for domestic or charity use, the whole supply is treated as a supply for domestic or charity use, and

b

in any other case, an apportionment shall be made to determine the extent to which the supply is for domestic or charity use.

Excluded supplies: meaning of “for domestic use”

9

1

For the purposes of paragraph 8 the following supplies are always for domestic use—

a

a supply of not more than one tonne of coal or coke held out for sale as domestic fuel;

b

a supply to a person at any premises of—

i

any gas in a gaseous state that is provided through pipes and is of a kind supplied by a gas utility, or

ii

petroleum gas in a gaseous state provided through pipes,

where the gas or petroleum gas (together with any other gas or petroleum gas provided through pipes to him at the premises by the same supplier) was not provided at a rate exceeding 4397 kilowatt hours a month;

c

a supply of petroleum gas in a liquid state where the petroleum gas is supplied in cylinders the net weight of each of which is less than 50 kilogrammes and either the number of cylinders supplied is 20 or fewer or the petroleum gas is not intended for sale by the recipient;

d

a supply of petroleum gas in a liquid state, otherwise than in cylinders, to a person at any premises at which he is not able to store more than two tonnes of such petroleum gas;

e

a metered supply of electricity to a person at any premises where the electricity (together with any other electricity provided to him at the premises by the same supplier) was not provided at a rate exceeding 1000 kilowatt hours a month;

f

an unmetered supply of electricity to a person where the electricity (together with any other unmetered electricity provided to him by the same supplier) was not provided at a rate exceeding 1000 kilowatt hours a month.

2

For the purposes of paragraph 8, supplies not within sub-paragraph (1) are for domestic use if and only if the commodity supplied is for use in—

a

a building, or part of a building, which consists of a dwelling or number of dwellings,

b

a building, or part of a building, used for a relevant residential purpose,

c

self-catering holiday accommodation (including any accommodation advertised or held out as such),

d

a caravan,

e

a houseboat (that is to say, a boat or other floating decked structure designed or adapted for use solely as a place of permanent habitation and not having means of, or capable of being readily adapted for, self-propulsion), or

f

an appliance that—

i

is not part of a combined heat and power station,

ii

is located otherwise than in premises of a description mentioned in any of paragraphs (a) to (e), and

iii

is used to heat air or water that, when heated, is supplied to premises of, or each of, such a description.

3

For the purposes of this paragraph use for a relevant residential purpose means use as—

a

a home or other institution providing residential accommodation for children,

b

a home or other institution providing residential accommodation with personal care for persons in need of personal care by reason of old age, disablement, past or present dependence on alcohol or drugs or past or present mental disorder,

c

a hospice,

d

residential accommodation for students or school pupils,

e

residential accommodation for members of any of the armed forces,

f

a monastery, nunnery or similar establishment, or

g

an institution which is the sole or main residence of at least 90 per cent. of its residents,

except use as a hospital, a prison or similar institution or an hotel or inn or similar establishment.

4

The power to make provision by order under section 2(1C) of the [1994 c. 23.] Value Added Tax Act 1994 varying, or varying any provision contained in, Schedule A1 to that Act (supplies for domestic use and non-business use by a charity that attract reduced VAT rate) includes power to make provision for any appropriate corresponding variation of, or of any provision contained in, this paragraph.

Excluded supplies: supply before 1st April 2001

10

Any supply made before 1st April 2001 is excluded from the levy.

Exemption: supply not for burning in the UK

11

1

A supply of a taxable commodity to which this sub-paragraph applies is exempt from the levy if the person to whom the supply is made has, before the supply is made, notified the supplier—

a

that he intends to use the commodity in making supplies of it to any other person, or

b

that he intends to cause the commodity to be exported from the United Kingdom and has no intention to cause it to be thereafter brought back into the United Kingdom.

2

Sub-paragraph (1) applies to supplies of a taxable commodity other than—

a

electricity, or

b

any gas in a gaseous state.

3

A supply of electricity, or of gas in a gaseous state, is exempt from the levy if the person to whom the supply is made has, before the supply is made, notified the supplier that—

a

he intends to cause the commodity to be exported from the United Kingdom, and

b

has no intention to cause it to be thereafter brought back into the United Kingdom.

4

Regulations under paragraph 22 may, in particular, include provision as to the application of sub-paragraph (3) in cases where a person who is both an exporter and an importer of a commodity intends to be a net exporter of the commodity.

Exemption: supply used in transport

12

1

A supply of a taxable commodity is exempt from levy if the commodity is to be burned (or, in the case of electricity, consumed)—

a

in order to propel a train,

b

in order to propel a non-railway vehicle while it is being used for, or for purposes connected with, transporting passengers,

c

in a railway vehicle, or a non-railway vehicle, while it is being used for, or for purposes connected with, transporting passengers,

d

in a railway vehicle while it is being used for, or for purposes connected with, transporting goods, or

e

in a ship while it is engaged on a journey any part of which is beyond the seaward limit of the territorial sea.

Paragraphs (a) to (c) are subject to the exception in sub-paragraph (3).

2

In this paragraph—

“railway vehicle” and “train” have the meaning given by section 83 of the [1993 c. 43.] Railways Act 1993;

non-railway vehicle” means—

a

any vehicle other than a railway vehicle, or

b

any ship,

that is designed or adapted to carry not less than 12 passengers.

3

Sub-paragraph (1)(a) to (c) does not apply in relation to the transporting of passengers to, from or within—

a

a place of entertainment, recreation or amusement, or

b

a place of cultural, scientific, historical or similar interest,

that is a place to which rights of admission, or where rights to use facilities at it, are supplied by the person to whom the commodity is supplied or by a person connected with him within the meaning of section 839 of the Taxes Act 1988.

Exemption: supplies to producers of commodities other than electricity

13

A supply of a taxable commodity to a person is exempt from the levy if—

a

the supply is not a supply of electricity that is deemed to be made under paragraph 23(3), and

b

the commodity is to be used by that person—

i

in producing taxable commodities other than electricity,

ii

in producing hydrocarbon oil or road fuel gas,

iii

in producing, for chargeable use within the meaning of section 6A of the [1979 c. 5.] Hydrocarbon Oil Duties Act 1979 (fuel substitutes), liquids that are not hydrocarbon oil, or

iv

in producing uranium for use in an electricity generating station.

For this purpose “hydrocarbon oil” and “road fuel gas” have the same meaning as in the [1979 c. 5.] Hydrocarbon Oil Duties Act 1979 and “liquid” has the same meaning as in section 6A of that Act.

Exemption: supplies (other than self-supplies) to electricity producers

14

1

A supply of a taxable commodity to a person is exempt from the levy if—

a

the commodity is to be used by that person in producing electricity in a generating station that is neither—

i

a fully exempt combined heat and power station, nor

ii

a partly exempt combined heat and power station,

and

b

the supply is not a supply of electricity that is deemed to be made under paragraph 23(3).

2

Sub-paragraph (1) does not exempt a supply where the person to whom the supply is made—

a

is an exempt unlicensed electricity supplier of a description prescribed by regulations made by the Treasury, and

b

uses the commodity supplied in producing electricity.

3

Sub-paragraph (1) does not exempt a supply where the person to whom the supply is made—

a

is an auto-generator,

b

uses the commodity supplied in producing electricity, and

c

uses the electricity produced otherwise than in making supplies that are excluded under paragraphs 8 to 10 or exempt under any of paragraphs 11, 12 and 18.

4

In this paragraph “exempt unlicensed electricity supplier” means a person—

a

to whom an exemption from section 4(1)(c) of the [1989 c. 29.] Electricity Act 1989 (persons supplying electricity to premises) has been granted by an order under section 5 of that Act, or

b

to whom an exemption from Article 8(1)(c) of the [S.I. 1992/231 (N.I. 1)] Electricity Supply (Northern Ireland) Order 1992 has been granted by an order under Article 9 of that Order,

except where he is acting otherwise than for purposes connected with the carrying on of activities authorised by the exemption.

5

Sub-paragraph (4) applies subject to—

a

any direction under paragraph 151(1), and

b

any regulations under paragraph 151(2).

Exemption: supplies (other than self-supplies) to combined heat and power stations

15

1

A supply of a taxable commodity to a person is exempt from the levy if—

a

the commodity is to be used by that person in—

i

a fully exempt combined heat and power station, or

ii

a partly exempt combined heat and power station,

in producing any outputs of the station, and

b

the supply is not a supply of electricity that is deemed to be made under paragraph 23(3).

For this purpose “outputs” has the meaning given by paragraph 148(9).

2

Where—

a

a supply of a taxable commodity to a person would (apart from this sub-paragraph) be exempted in full by sub-paragraph (1), and

b

at the time the supply is made, the efficiency percentage for the combined heat and power station in which the commodity is to be used by that person is less than the threshold efficiency percentage for the station,

sub-paragraph (1) only exempts the relevant fraction of the supply.

3

For the purposes of sub-paragraph (2), the “relevant fraction” of a supply of a taxable commodity that is to be used in a combined heat and power station is the fraction—

a

whose numerator is the efficiency percentage for the station at the time the supply is made, and

b

whose denominator is the threshold efficiency percentage for the station at that time.

4

For the purposes of this paragraph—

a

the “threshold efficiency percentage” for a combined heat and power station is the percentage set as the threshold efficiency percentage for the station by regulations made by the Treasury;

b

the “efficiency percentage” for a combined heat and power station is the percentage stated as the efficiency percentage for the station in a certificate in force in respect of the station under paragraph 148 (certificate given by Secretary of State that station is fully or partly exempt).

5

Paragraph 149 confers power to make provision by regulations for determining the efficiency percentage to be stated in a certificate under paragraph 148.

Exemption: supplies (other than self-supplies) of electricity from partly exempt combined heat and power stations

16

1

This paragraph applies to a supply that—

a

is a supply made from a partly exempt combined heat and power station of electricity produced in the station, and

b

is not a supply that is deemed to be made under paragraph 23(3).

2

The supply is exempt from the levy if the quantity of electricity supplied by the supply is not such as causes the exceeding of any specified limit that, by virtue of regulations made by the Treasury, applies in relation to the station for any specified period.

3

In this paragraph “specified” means prescribed by, or determined in accordance with, regulations made by the Treasury.

Exemption: self-supplies by electricity producers

17

1

This paragraph applies to a supply of electricity that is deemed to be made under paragraph 23(3) by a person (“the producer”) to himself.

2

If the producer is an auto-generator, the supply is exempt from the levy unless—

a

it is a supply from a partly-exempt combined heat and power station of electricity produced in the station, and

b

the quantity of electricity supplied by the supply is such as causes the exceeding of any such limit as is mentioned in paragraph 16(2) that applies in relation to the station.

3

If the producer is not an auto-generator, the supply is exempt from the levy if it is a supply made from a fully exempt combined heat and power station of electricity produced in the station.

4

If the producer is not an auto-generator, the supply is exempt from the levy if—

a

it is a supply from a partly-exempt combined heat and power station of electricity produced in the station, and

b

the quantity of electricity supplied by the supply is not such as causes the exceeding of any such limit as is mentioned in paragraph 16(2) that applies in relation to the station.

Exemption: supply not used as fuel

18

1

A supply of a taxable commodity is exempt from the levy if the person to whom the supply is made intends to cause the commodity to be used otherwise than as fuel.

2

The Treasury may by regulations specify, in relation to any commodity, uses of that commodity that, for the purposes of sub-paragraph (1), are to be taken as being, or as not being, uses of that commodity as fuel.

3

The uses of a commodity that may be specified under sub-paragraph (2) as being uses of that commodity as, or otherwise than as, fuel include uses (“mixed uses”) of the commodity that involve it being used partly as fuel and partly not; but the Treasury must have regard to the object of securing that a mixed use is not specified as being a use of the commodity otherwise than as fuel if it involves the use of the commodity otherwise than as fuel in a way that is merely incidental to its use as fuel.

Exemption: electricity from renewable sources

19

1

A supply of electricity is exempt from the levy if—

a

the supply is not one that is deemed to be made under paragraph 23(3),

b

the supply is made under a contract that contains a renewable source declaration given by the supplier,

c

prescribed conditions are fulfilled, and

d

the supplier, and each other person (if any) who is a generator of any renewable source electricity allocated by the supplier to supplies under the contract, has in a written notice given to the Commissioners agreed that he will fulfil those conditions so far as they may apply to him.

2

In this paragraph “renewable source declaration” means a declaration that, in each averaging period, the amount of electricity supplied by exempt renewable supplies made by the supplier in the period will not exceed the difference between—

a

the total amount of renewable source electricity that during that period is either acquired or generated by the supplier, and

b

so much of that total amount as is allocated by the supplier otherwise than to exempt renewable supplies made by him in the period.

In this sub-paragraph “averaging period” has the same meaning as in paragraph 20 and “exempt renewable supplies” means supplies made on the basis that they are exempt under this paragraph.

3

For the purposes of this paragraph and paragraph 20, electricity is “renewable source electricity” if—

a

it is generated in a prescribed manner, and

b

prescribed conditions are fulfilled.

A manner of generating electricity may be prescribed by reference to the means by which the electricity is generated or the materials from which it is generated (or both).

4

In prescribing a manner of generating electricity under sub-paragraph (3), the Commissioners must have regard to the object of securing that exemption under this paragraph is only available for supplies of electricity that has a renewable source.

5

The conditions that may be prescribed under sub-paragraph (1)(c) include, in particular, conditions in connection with—

a

the giving of effect to renewable source declarations;

b

the supply of information;

c

the inspection of records and, for that purpose, the production of records in legible form and entry into premises;

d

monitoring by the Gas and Electricity Markets Authority, or the Director General of Electricity Supply for Northern Ireland, of the application of provisions of, or made under, this paragraph;

e

the doing of things to or by a person authorised by the Authority or the Director General (as well as to or by the Authority or the Director General);

f

things being done at times or in ways specified by the Authority, the Director General or such an authorised person.

6

A condition prescribed under sub-paragraph (1)(c) may be one that is required to be fulfilled throughout a period, including a period ending after the time when a supply whose exemption turns on the fulfilment of the condition is treated as being made.

7

The conditions that may be prescribed under sub-paragraph (3)(b) include, in particular, conditions in connection with—

a

the generation of the electricity;

b

the materials from which the electricity is generated;

c

any of the matters mentioned in paragraphs (b) to (f) of sub-paragraph (5).

8

Each of—

a

the Gas and Electricity Markets Authority, and

b

the Director General of Electricity Supply for Northern Ireland,

shall supply the Commissioners with such information (whether or not obtained under this paragraph), and otherwise give the Commissioners such co-operation, as the Commissioners may require in connection with the application (whether generally or in relation to any particular case) of any relevant provisions.

9

In sub-paragraph (8) “relevant provisions” means provisions of or made under—

a

this paragraph or paragraph 20, or

b

paragraph 23(3) so far as relating to electricity, or paragraph 23(4).

10

None of—

a

section 57(1) of the [1989 c. 29.] Electricity Act 1989,

b

section 42(1) of the [1986 c. 44.] Gas Act 1986, and

c

Article 61(1) of the [S.I. 1992/231 (N.I. 1).] Electricity (Northern Ireland) Order 1992,

(provisions restricting disclosure of information) applies to any disclosure of information made in pursuance of sub-paragraph (8).

Exemption under paragraph 19: averaging periods

20

1

This paragraph applies where a person (“the supplier”) makes supplies of electricity on the basis that they are exempt under paragraph 19 (“exempt renewable supplies”).

2

The rules about balancing and averaging periods are—

a

a balancing period is a period of 3 months;

b

when a balancing period ends, a new one begins;

c

the first balancing period and the first averaging period begin at the same time;

d

unless the supplier specifies an earlier time, that time is the time when he is treated as making the first of the exempt renewable supplies;

e

when an averaging period ends, a new one begins;

f

an averaging period ends once it has run for 2 years (but may end sooner under paragraph (g) or sub-paragraph (4)(a) or (5)(a));

g

if the supplier stops making exempt renewable supplies, the end of the balancing period in which he makes the last exempt renewable supply is also the end of the averaging period in which that balancing period falls.

3

At the end of each balancing period calculate—

a

the total of—

i

the quantity of renewable source electricity that the supplier acquired or generated in that period, and

ii

any balancing credit carried forward to that balancing period; and

b

the total of—

i

the quantity of electricity supplied by exempt renewable supplies made by him in that period, and

ii

any balancing debit carried forward to that balancing period.

4

If the total mentioned in sub-paragraph (3)(a) exceeds that mentioned in sub-paragraph (3)(b)—

a

the averaging period within which the balancing period fell ends at the end of the balancing period, and

b

a balancing credit equal to the difference between the two totals is carried forward to the next balancing period.

5

If the totals mentioned in paragraphs (a) and (b) of sub-paragraph (3) are the same—

a

the averaging period within which the balancing period fell ends at the end of the balancing period, and

b

no balancing credit or debit is carried forward to the next balancing period.

6

Sub-paragraphs (7) and (8) apply if the total mentioned in sub-paragraph (3)(b) exceeds that mentioned in sub-paragraph (3)(a).

7

Where the end of the balancing period is by virtue of sub-paragraph (2)(c) (averaging period ends after 2 years) the end of an averaging period, the supplier is liable to account to the Commissioners for an amount equal to the amount that would be payable by way of levy on a taxable supply that—

a

is made at the end of the balancing period,

b

is a supply of a quantity of electricity equal to the difference between the two totals, and

c

is treated as a reduced-rate supply to the extent (if any) that the exempt renewable supplies made by the supplier in the averaging period would have been reduced-rate supplies if they had not been made on the basis that they were exempt.

For the purposes of this Schedule, the amount for which the supplier is liable to account shall be treated as an amount of levy for which he is liable to account for an accounting period ending at the end of the balancing period.

8

Where sub-paragraph (7) does not apply, a balancing debit equal to the difference between the two totals is carried forward to the next balancing period.

Regulations to avoid double charges to levy

21

1

The Commissioners may by regulations make provision for avoiding, counteracting or mitigating double charges to levy.

2

For the purposes of this paragraph there is a double charge to levy where—

a

a supply of a taxable commodity (“the produced commodity”) is a taxable supply, and

b

a taxable commodity used directly or indirectly in producing the produced commodity has been the subject of a taxable supply.

3

Regulations under this paragraph may, in particular, make provision for a supply of a taxable commodity to be wholly or to any extent—

a

exempt from the levy, or

b

deemed not a supply of the commodity.

4

The provision mentioned in sub-paragraph (3) includes provision for exceptions to any of sub-paragraphs (1) to (3) of paragraph 23 or paragraph 24(3).

5

The powers conferred by this paragraph are in addition to the powers to make provision by tax credit regulations in relation to any such case as is mentioned in paragraph 62(1)(g).

Regulations giving effect to exemptions

22

1

The Commissioners may by regulations make provision for giving effect to the exclusions and exemptions provided for by paragraphs 8 to 21.

2

Regulations under this paragraph may, in particular, include provision for—

a

determining the extent to which a supply of a taxable commodity is, or is to be treated as being, a taxable supply;

b

authorising a person making supplies of a taxable commodity to another person to treat the supplies to that other person as being taxable supplies only to an extent certified by the Commissioners.

Deemed supply: use of commodities by utilities and producers

23

1

Where an electricity utility—

a

has electricity available to it, and

b

as regards a quantity of the electricity, makes no supply of that quantity to another person but causes it to be consumed in the United Kingdom,

the utility is for the purposes of this Schedule deemed to make a supply to itself of that quantity of the electricity.

2

Where a gas utility—

a

holds gas in a gaseous state, and

b

as regards a quantity of the gas, makes no supply of that quantity to another person but causes it to be burned in the United Kingdom,

the utility is for the purposes of this Schedule deemed to make a supply to itself of that quantity of the gas.

3

Where—

a

a person has produced a taxable commodity,

b

the commodity is either—

i

a taxable commodity other than electricity, or

ii

electricity that has been produced from taxable commodities, and

c

as regards a quantity of the commodity, the person makes no supply of that quantity to another person but causes it to be burned (or, in the case of electricity, consumed) in the United Kingdom,

the person is for the purposes of this Schedule deemed to make a supply to himself of that quantity of the commodity.

4

The Commissioners may by regulations make provision for electricity to be treated for the purposes of sub-paragraph (3)(b)(ii)—

a

as produced from taxable commodities unless prescribed conditions are fulfilled, or

b

as produced otherwise than from taxable commodities only where prescribed conditions are fulfilled.

5

The conditions that may be prescribed under sub-paragraph (4) include, in particular, conditions in connection with the materials from which the electricity is produced.

Deemed supply: change of circumstances or intentions

24

1

This paragraph applies where—

a

a supply of a taxable commodity has been made to a person on or after 1st April 2001,

b

the supply was not a taxable supply, and

c

there is such a change in circumstances or any person’s intentions that, if the changed circumstances or intentions had existed at the time the supply was made, the supply would have been a taxable supply.

2

This paragraph does not apply where the supply was not a taxable supply by reason of being exempt from the levy under paragraph 19 (exemption for supply of electricity from renewable sources, but see paragraph 20).

3

The person to whom the supply was made is for the purposes of this Schedule deemed to make a taxable supply of the commodity to himself.

4

Where—

a

a supply of a taxable commodity was not a taxable supply by virtue of being supplied for use in premises of a description mentioned in any of paragraphs (a) to (f) of paragraph 9(2), and

b

those premises cease to be premises of any of those descriptions,

sub-paragraph (3) only applies to so much (if any) of the commodity supplied as was not used in the premises before they ceased to be premises of any of those descriptions.

5

The Commissioners may by regulations make provision specifying descriptions of occurrences and non-occurrences that are to be taken as being, or as not being, changes of circumstances or intentions for the purposes of sub-paragraph (1)(c).

Part IIITime of supply

Introduction

25

This Part of this Schedule applies to determine when a supply of a taxable commodity is treated as taking place.

Electricity or gas: supply when climate change levy accounting document issued

26

1

This paragraph applies—

a

to supplies of electricity, and

b

to supplies of gas where the gas is supplied in a gaseous state and is of a kind supplied by a gas utility.

2

Where this paragraph applies, a supply is treated as taking place each time a climate change levy accounting document in respect of a supply is issued by the person making the supply.

3

A supply that is treated as taking place under this paragraph is a supply of the electricity or gas covered by the accounting document.

4

Nothing in this paragraph applies to any electricity or gas that is covered by a special utility scheme (see paragraph 29).

Electricity or gas: duty to issue climate change levy accounting document

27

1

This paragraph applies where on any day—

a

electricity, or gas that is in a gaseous state and is of a kind supplied by a gas utility, is actually supplied to a person (“the consumer”),

b

the supply by which the electricity or gas is supplied is a taxable supply, and

c

the person liable to account for the levy on that supply is the person making the supply (“the supplier”).

2

A climate change levy accounting document covering the electricity or gas actually supplied on that day must be issued by the supplier no later than—

a

the end of the period of 15 weeks beginning with that day, if on that day the consumer is a small-scale user of the commodity supplied;

b

the end of the period of 6 weeks beginning with that day, if on that day the consumer is not a small-scale user of the commodity supplied.

3

A climate change levy accounting document issued under this paragraph that covers the electricity, or the gas of any kind, actually supplied on any day must also cover any electricity or (as the case may be) any gas of that kind that—

a

has been actually supplied by the supplier to the consumer on any earlier day, and

b

has not been covered by a previous climate change levy accounting document.

4

For the purposes of this paragraph—

a

an accounting document shall be taken to cover the electricity or gas actually supplied on a day if it covers the electricity or gas actually supplied during a period that includes that day; and

b

an accounting document shall be taken to cover the electricity or gas actually supplied on a day or during a period if it is an accounting document for a quantity of electricity or gas that is a reasonable estimate of the quantity actually supplied.

5

A climate change levy accounting document issued under this paragraph must contain a statement of—

a

the quantity of electricity or gas that it covers,

b

the period during which, or during which it is estimated that, that quantity was actually supplied,

c

the supplier’s name and address,

d

the customer’s name and address, and

e

the reference number used by the supplier for the customer.

6

For the purposes of this paragraph a person is, on any day, a small-scale user of a commodity if the rate at which he is taken to be supplied with that commodity on that day does not exceed the prescribed rate.

7

The Commissioners may make provision by regulations as to the rate at which a person is, for the purposes of sub-paragraph (6), taken to be supplied with a commodity on any day.

8

Regulations under sub-paragraph (7) may, in particular, include provision for—

a

rates to be determined or estimated in accordance with the regulations;

b

rates to be so determined or estimated by reference to the quantity of a commodity actually supplied, or estimated to have been actually supplied, during a period ending with, or at any time before or after, the day in question;

c

cases where a person is supplied with a commodity of any kind by two or more suppliers.

9

Nothing in this paragraph applies to any electricity or gas—

a

that is covered by a special utility scheme (see paragraph 29), or

b

that is actually supplied before 1st April 2001.

10

This paragraph applies subject to paragraph 36(5).

Electricity or gas: actual supply not followed by climate change levy accounting document

28

1

This paragraph applies where on any day—

a

electricity, or gas that is in a gaseous state and is of a kind supplied by a gas utility, is actually supplied to a person (“the consumer”),

b

the supply by which the electricity or gas is supplied is a taxable supply,

c

the person liable to account for the levy on that supply is the person making the supply (“the supplier”), and

d

the supplier does not within the period applicable under sub-paragraph (2) of paragraph 27 issue a climate change levy accounting document under that paragraph covering the electricity or gas.

2

Where this paragraph applies, a supply is treated as taking place at the end of that period.

3

A supply that is treated as taking place under this paragraph is a supply of all the electricity or (as the case may be) gas of the same kind that—

a

has been actually supplied by the supplier to the consumer before the end of that period, and

b

has not been covered by a climate change levy accounting document.

4

Sub-paragraph (4) of paragraph 27 (interpretation of “covered by an accounting document”) applies for the purposes of this paragraph as for those of that paragraph.

5

Nothing in this paragraph applies to any electricity or gas—

a

that is covered by a special utility scheme (see paragraph 29),

b

that is actually supplied before 1st April 2001, or

c

that is treated under paragraph 36(3) as supplied on that day.

Electricity or gas: special utility schemes

29

1

For the purposes of this Schedule a “special utility scheme” is a scheme for determining when—

a

a supply of electricity, or

b

a supply of gas that is in a gaseous state and is of a kind supplied by a gas utility,

is treated as taking place in cases where the electricity or gas is covered by the scheme.

2

If in the opinion of the Commissioners it is reasonable to do so, they may in accordance with the provisions of this paragraph prepare a special utility scheme for a utility or for two or more utilities.

In this paragraph “utility” includes a person who makes supplies on which levy is chargeable by virtue of paragraph 5(2) (partly exempt combined heat and power stations).

3

A special utility scheme shall specify the period for which it is to have effect.

4

No special utility scheme shall be of any effect in relation to any electricity or gas supplied by a utility unless the utility elects in writing to be bound by it for the specified period.

5

If a utility makes such an election—

a

the scheme shall have effect for the specified period in relation to such electricity or gas supplied by the utility as is covered by the scheme, and

b

during the specified period the scheme applies to determine when a supply of a taxable commodity is treated as taking place if the commodity is electricity or gas covered by the scheme.

6

A special utility scheme may—

a

cover all or any of the electricity or gas supplied by a utility for which the scheme is prepared;

b

provide for paragraph 36 or 37 not to apply, or to apply with modifications, to electricity or gas covered by the scheme.

7

The Commissioners may by regulations make further provision with respect to special utility schemes, including (in particular) provision amending this paragraph.

Other commodities: general rules for supply by UK residents

30

1

This paragraph applies to supplies that are not of either of the descriptions mentioned in paragraphs (a) and (b) of paragraph 26(1) (electricity and gas in a gaseous state).

2

The general rules as to when such supplies are taken to be made are, in cases where the supply is made by a person resident in the United Kingdom, as follows—

a

if the commodity is to be removed, the supply takes place at the time of the removal;

b

if the commodity is not to be removed, the supply takes place when the commodity is made available to the person to whom it is supplied;

c

if the commodity (being sent or taken on approval or sale or return or similar terms) is removed before it is known whether a supply will take place, the supply takes place when it becomes certain that the supply has taken place or, if sooner, 12 months after the removal.

3

These general rules are subject to—

paragraph 31 (earlier invoice),

paragraph 32 (later invoice),

paragraph 34 (deemed supplies), and

paragraph 36 (directions by Commissioners).

Other commodities: earlier invoice

31

1

If before the time applicable under paragraph 30(2) the person making the supply—

a

issues an invoice in respect of the supply, or

b

receives a payment in respect of it,

the supply is treated, to the extent that it is covered by the invoice or payment, as taking place when the invoice is issued or the payment is received.

2

Sub-paragraph (1) does not apply where the commodity (being sent or taken on approval or sale or return or similar terms) is removed before it is known whether a supply will take place.

3

Sub-paragraph (1) applies subject to any direction under paragraph 35(3).

Other commodities: later invoice

32

1

If within 14 days after the time applicable under paragraph 30(2) the person making the supply issues an invoice in respect of it, the supply is treated as taking place at the time the invoice is issued.

2

This does not apply—

a

to the extent that the supply is treated as taking place at the time mentioned in paragraph 31(1) (earlier invoice), or

b

if the person liable to account for any levy charged on the supply has notified the Commissioners in writing that he elects not to avail himself of sub-paragraph (1).

3

The Commissioners may, at the request of a person liable to account for any levy charged on any supplies, direct that sub-paragraph (1) shall apply—

a

in relation to those supplies, or

b

in relation to such of those supplies as may be specified in the direction,

with the substitution for the period of 14 days of such longer period as may be specified in the direction.

4

Sub-paragraphs (1) to (3) apply subject to any direction under paragraph 35.

Other commodities: supply by non-UK residents

33

1

This paragraph applies to supplies that—

a

are not of either of the descriptions mentioned in paragraphs (a) and (b) of paragraph 26(1) (electricity and gas in a gaseous state), and

b

are made by a person who is not resident in the United Kingdom.

2

The supply is treated as taking place—

a

when the commodity is delivered to the person to whom it is supplied, or

b

if earlier, when it is made available in the United Kingdom to that person.

3

Sub-paragraph (2) applies subject to—

a

sub-paragraph (4),

b

paragraph 34 (deemed supplies), and

c

any direction under paragraph 35.

4

If within 14 days after the time applicable under sub-paragraph (2) the person to whom the supply is made elects in writing for the supply to be treated as taking place at the time the election is made, the supply is treated as taking place at the time the election is made.

Other commodities: deemed supplies

34

1

This paragraph applies to supplies that—

a

are not of either of the descriptions mentioned in paragraphs (a) and (b) of paragraph 26(1) (electricity and gas in a gaseous state), and

b

are deemed to be made under paragraph 23 or 24.

2

A supply that is deemed to be made under paragraph 23 is treated as taking place when the commodity is burned (or, in the case of electricity, consumed).

3

A supply that is deemed to be made under paragraph 24 is treated as taking place upon the occurrence of the change in circumstances or intentions.

Other commodities: directions by Commissioners

35

1

This paragraph applies to supplies that are not of either of the descriptions mentioned in paragraphs (a) and (b) of paragraph 26(1) (electricity and gas in a gaseous state).

2

The Commissioners may, at the request of the person liable to account for any levy charged on any supplies to which this paragraph applies, make a direction under sub-paragraph (3) or (4) altering the time at which those supplies (or such of those supplies as may be specified in the direction) are to be treated as taking place.

3

The Commissioners may direct that the supplies shall be treated as taking place—

a

at times or on dates determined by or by reference to the occurrence of some event described in the direction, or

b

at times or on dates determined by or by reference to the time when some event so described would in the ordinary course of events occur,

provided the resulting times or dates are in every case earlier than would otherwise apply.

4

The Commissioners may direct that the supplies shall be treated as taking place—

a

at the beginning of the relevant working period (as defined in the case of the person making the request in and for the purposes of the direction), or

b

at the end of the relevant working period (as so defined).

5

A direction under sub-paragraph (4) shall not apply to the extent that the time when the supplies in question are made is determined by paragraph 31(1).

Supplies invoiced or paid for before 1st April 2001

36

1

This paragraph applies where—

a

the taxable commodities covered by an invoice issued, or payment received, before 1st April 2001 are to any extent commodities that have not been burned (or, in the case of electricity, consumed) before the invoice is issued or payment is received, and

b

the advance invoicing or payment is not acceptable normal practice.

It does not matter whether the invoice mentioned in paragraph (a) is, or is not, a climate change levy accounting document.

2

A fair apportionment shall be made to determine the quantity of the taxable commodities covered by the invoice or payment that will not be, or was not, burned (or consumed) before 1st April 2001.

3

Where this paragraph applies, a supply is treated as taking place on 1st April 2001.

That supply is a supply of the quantity of the taxable commodities that is mentioned in, and determined under, sub-paragraph (2).

4

For the purposes of this paragraph advance invoicing or payment is “acceptable normal practice” if—

a

the supply is of a kind in the case of which it is normal practice for invoices to be issued, or payments made, in respect of taxable commodities not already burned (or consumed),

b

that practice does not involve issuing invoices, or making payments, more than 15 weeks in advance of the burning (or consumption) of any of the taxable commodities in respect of which the invoice is issued or payment is made, and

c

the advance invoicing or payment is in accordance with the practice.

5

Nothing in paragraph 27 requires a climate change levy accounting document to be issued to cover any commodities that are supplied by a supply that, under sub-paragraph (3), is treated as made on 1st April 2001.

6

This paragraph applies to invoices issued, and payments received, before the passing of this Act (as well as to those issued or received after its passing).

Supplies of electricity or gas spanning change of rate etc.

37

1

This paragraph applies in the case of a supply of electricity, or of gas that is in a gaseous state and is of a kind supplied by a gas utility, affected by—

a

a change in the descriptions of supplies that are taxable supplies,

b

a change in any rate of levy in force,

c

a change consisting in the rate of levy applicable to the supply ceasing to be, or becoming, the rate that is applicable to half-rate supplies or reduced-rate supplies, or

d

the change consisting in the transition from 31st March 2001 to 1st April 2001.

2

For the purposes of this paragraph a supply is affected by a change if the electricity or gas of which it is a supply (“the supplied commodity”) is actually supplied partly before the change and partly after.

However, this paragraph does not apply in the case of a supply that, under paragraph 36(3), is treated as made on 1st April 2001.

3

If the person liable to account for any levy on the supply so elects—

a

the rate at which levy is chargeable on any part of the supply, or

b

any question whether, or to what extent, the supply is a taxable supply,

shall be determined in accordance with sub-paragraph (5) or (6).

4

An election for determination in accordance with sub-paragraph (6) may be made only where—

a

there is such a change as is mentioned in sub-paragraph (1)(c), and

b

all the supplied commodity is actually supplied before the supply is treated as taking place.

5

Where the election is for determination in accordance with this sub-paragraph, the rules are—

A

Treat the fraction of the supplied commodity actually supplied before the change (“the pre-change fraction”) as supplied by a supply made before the change and treat the fraction of the supplied commodity actually supplied after the change (“the post-change fraction”) as supplied by a supply made after the change.

B

Where the pre-change and post-change fractions are not known (because, for example, there are no relevant meter readings available)—

“the pre-change fraction” is calculated by dividing—

a

the number of days in the period over which the supply is actually made that fall before the change, by

b

the number of days in that period; and

“the post-change fraction” is the difference between 1 and the pre-change fraction.

C

If use of the fractions given by rule B would produce an inequitable result, the pre-change and post-change fractions may be derived from a reasonable estimate of the fractions of the supplied commodity actually supplied before and after the change.

6

Where the election is for determination in accordance with this sub-paragraph, treat the change as taking place immediately after the time at which the last of the supplied commodity was actually supplied.

Other supplies spanning change of rate etc.

38

1

This paragraph applies where there is—

a

a change in the descriptions of supplies that are taxable supplies,

b

a change in the rate of levy in force,

c

a change consisting in the rate of levy applicable to any supply ceasing to be, or becoming, the rate that is applicable to half-rate supplies or reduced-rate supplies, or

d

the change consisting in the transition from 31st March 2001 to 1st April 2001.

2

Where—

a

a supply affected by the change would apart from special provisions be treated under paragraph 30(2) or 33(2) as made wholly or partly at a time when it would not have been affected by the change, or

b

a supply not so affected would apart from special provisions be treated under paragraph 30(2) or 33(2) as made wholly or partly at a time when it would have been so affected,

the rate at which levy is chargeable on the supply, or any question whether it is a taxable supply, shall, if the person liable to account for any levy on the supply so elects, be determined without regard to the special provisions.

3

In this paragraph “special provisions” means the provisions of paragraphs 31, 32, 33(4) and 35.

Regulations as to time of supply

39

1

The Commissioners may make provision by regulations as to the time at which a supply is to be treated as taking place—

a

in cases where the supply is for a consideration and the whole or part of the consideration—

i

is determined or payable periodically, or from time to time, or at the end of any period, or

ii

is determined at the time when the commodity is appropriated for any purpose;

b

in the case of a supply otherwise than for consideration;

c

in the case of any supply that is deemed to be made under paragraph 23 or 24.

2

In any such case as is mentioned in sub-paragraph (1) the regulations may provide that a taxable commodity shall be treated as separately and successively supplied at prescribed times or intervals.

3

Paragraphs 26 to 36 (main rules as to time of supply) have effect subject to any regulations under this paragraph.

4

The power to make regulations under this paragraph includes power to provide for specified provisions of the regulations to be treated as special provisions for the purposes of paragraph 38 (supplies spanning change of rate etc.).

Part IVPayment and rate of levy

Persons liable to account for levy

40

1

The person liable to account for the levy charged on a taxable supply is, except in a case where sub-paragraph (2) applies, the person making the supply.

2

In the case of a taxable supply made by a person who—

a

is not resident in the United Kingdom, and

b

is not a utility,

the person liable to account for the levy charged on the supply is the person to whom the supply is made.

Returns and payment of levy

41

1

The Commissioners may by regulations make provision—

a

for persons liable to account for levy to do so by reference to such periods (“accounting periods”) as may be determined by or under the regulations;

b

for persons who are or are required to be registered for the purposes of the levy to be subject to such obligations to make returns for those purposes for such periods, at such times and in such form as may be so determined; and

c

for persons who are required to account for levy for any period to become liable to pay the amounts due from them at such times and in such manner as may be so determined.

2

Without prejudice to the generality of the powers conferred by sub-paragraph (1), regulations under this paragraph may contain provision—

a

for levy falling in accordance with the regulations to be accounted for by reference to one accounting period to be treated in prescribed circumstances, and for prescribed purposes, as levy due for a different period;

b

for the correction of errors made when accounting for levy by reference to any period;

c

for the entries to be made in any accounts in connection with the correction of any such errors and for the financial adjustments to be made in that connection;

d

for a person, for purposes connected with the making of any such entry or financial adjustment, to be required to provide to any prescribed person, or to retain, a document in the prescribed form containing prescribed particulars of the matters to which the entry or adjustment relates;

e

for enabling the Commissioners, in such cases as they may think fit, to dispense with or relax a requirement imposed by regulations made by virtue of paragraph (d);

f

for the amount of levy which, in accordance with the regulations, is treated as due for a later period than that by reference to which it should have been accounted for to be treated as increased by an amount representing interest at the rate applicable under section 197 of the Finance Act 1996 for such period as may be determined in accordance with the regulations.

3

Subject to the following provisions of this paragraph, if any person (“the taxpayer”) fails—

a

to comply with so much of any regulations under this paragraph as requires him, at or before a particular time, to make a return for any accounting period, or

b

to comply with so much of any regulations under this paragraph as requires him, at or before a particular time, to pay an amount of levy due from him,

he shall be liable to a penalty of £250.

4

Liability to a penalty under sub-paragraph (3) shall not arise if the taxpayer satisfies the Commissioners or, on appeal, an appeal tribunal—

a

that there is a reasonable excuse for the failure to make the return or to pay the levy in accordance with the regulations; and

b

that there is not an occasion after the last day on which the return or payment was required by the regulations to be made when there was a failure without a reasonable excuse to make it.

5

Where, by reason of any failure falling within paragraph (a) or (b) of sub-paragraph (3)—

a

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

b

a person is assessed to a penalty under paragraph 98 (penalty for evasion),

that person shall not, by reason of that failure, be liable also to a penalty under that sub-paragraph (3).

Amount payable by way of levy

42

1

The amount payable by way of levy on a taxable supply is—

a

if the supply is neither a half-rate supply nor a reduced-rate supply, the amount ascertained from the Table in accordance with sub-paragraph (2);

b

if the supply is a half-rate supply, 50 per cent. of the amount that would be payable if the supply were neither a half-rate supply nor a reduced-rate supply;

c

if the supply is a reduced-rate supply, 20 per cent. of the amount that would be payable if the supply were neither a half-rate supply nor a reduced-rate supply.

TABLE

Taxable commodity supplied

Rate at which levy payable if supply is neither a half-rate supply nor a reduced-rate supply

Electricity…

£0.0043 per kilowatt hour

Gas supplied by a gas utility or any gas supplied in a gaseous state that is of a kind supplied by a gas utility…

£0.0015 per kilowatt hour

Any petroleum gas, or other gaseous hydrocarbon, supplied in a liquid state…

£0.0096 per kilogram

Any other taxable commodity…

£0.0117 per kilogram

2

The levy payable on a fraction of a quantity of a commodity is that fraction of the levy payable on that quantity of the commodity.

Half-rate for supplies to horticultural producers

43

1

For the purposes of this Schedule a half-rate supply is a taxable supply in respect of which the following conditions are satisfied—

a

the first condition is that the person to whom the supply is made is a horticultural producer;

b

the second condition is that the horticultural producer intends to use the taxable commodity supplied—

i

in the heating, for the growth of horticultural produce primarily with a view to the production of horticultural produce for sale, of any building or structure, or of the earth or other growing medium in it,

ii

in the lighting, for the growth of horticultural produce primarily with a view to the production of horticultural produce for sale, of any building or structure, or

iii

in the sterilisation of the earth or other growing medium to be used for the growth of horticultural produce as mentioned in sub-paragraph (i) in any building or structure.

2

In this paragraph “horticultural producer” means a person growing horticultural produce primarily for sale.

3

In this paragraph “horticultural produce” means—

a

fruit;

b

vegetables of a kind grown for human consumption, including fungi, but not including maincrop potatoes or peas grown for seed, for harvesting dry or for vining;

c

flowers, pot plants and decorative foliage;

d

herbs;

e

seeds other than pea seeds, and bulbs and other material, being seeds, bulbs or material for sowing or planting for the production of—

i

fruit,

ii

vegetables falling within paragraph (b),

iii

flowers, plants or foliage falling within paragraph (c), or

iv

herbs,

or for reproduction of the seeds, bulbs or other material planted; or

f

trees and shrubs, other than trees grown for the purpose of afforestation;

but does not include hops.

4

The Commissioners may by regulations make provision for facilitating the enjoyment of the reduced rate of levy payable on half-rate supplies.

5

Regulations under sub-paragraph (4) may, in particular, include provision—

a

for determining the extent to which a taxable supply is, or is to be treated as being, a half-rate supply;

b

for authorising a person making taxable supplies to another person to treat the supplies to that other person as being half-rate supplies only to an extent certified by the Commissioners;

c

for a person making half-rate supplies (“the supplier”) to account for levy on those supplies as if the supplies were neither half-rate supplies nor reduced-rate supplies.

6

Provision such as is mentioned in sub-paragraph (5)(c) may be made only where tax credit regulations provide for a horticultural producer to be entitled to a tax credit in respect of 50 per cent. of the levy accounted for by the supplier on any half-rate supplies—

a

that are made by the supplier to the horticultural producer, and

b

on which the supplier has accounted for levy on the basis mentioned in sub-paragraph (5)(c).

Reduced-rate for supplies covered by climate change agreement

44

1

Where the Secretary of State gives a certificate to the Commissioners stating that, for a period specified in the certificate, a facility is to be taken as being covered by a climate change agreement, the Commissioners shall publish a notice in respect of the facility.

2

Such a notice shall—

a

state the day on which it is published,

b

identify the facility or facilities in respect of which it is published,

c

for each facility—

i

set out the first and last days of the period specified for the facility in the Secretary of State’s certificate, and

ii

indicate the effect of sub-paragraph (3),

and

d

indicate that the notice may be varied by later notices.

3

For the purposes of this Schedule, a reduced-rate supply is a taxable supply in respect of which the following conditions are satisfied—

a

the first condition is that the taxable commodity supplied by the supply is supplied to a facility identified in a notice published under sub-paragraph (1);

b

the second condition is that the supply is made at a time falling in the period that begins with the later of—

i

the first day set out for the facility under sub-paragraph (2)(c), and

ii

the day on which the notice is published,

and ends with the last day set out for the facility under sub-paragraph (2)(c).

4

Sub-paragraph (3) has effect subject to paragraph 45.

5

The Commissioners may, for the purposes of sub-paragraph (3), by regulations make provision for determining whether any taxable commodity is supplied to a facility.

6

The provision that may be made by regulations under sub-paragraph (5) includes, in particular, provision for a taxable commodity of any description specified in the regulations to be taken as supplied to a facility only if the commodity is delivered to the facility.

Reduced-rate supplies: variation of notices under paragraph 44

45

1

This paragraph applies where the Secretary of State, after having given in respect of a facility such a certificate as is mentioned in paragraph 44(1) (“the original certificate”), gives a certificate (a “variation certificate”) to the Commissioners stating—

a

that, throughout the period (“the original period”) specified for the facility in the original certificate, the facility is to be taken as not being covered by a climate change agreement; or

b

that, for so much of the original period as falls on or after a day specified in the variation certificate (being a day falling within the original period), the facility is to be taken as no longer being covered by a climate change agreement.

2

Where the Commissioners receive a variation certificate in respect of a facility before they have published a notice under paragraph 44(1) in response to the original certificate so far as relating to the facility, their obligation to publish a notice under paragraph 44(1) in respect of the facility shall have effect as an obligation to publish such a notice in response to the original certificate as varied by the variation certificate.

3

Where the Commissioners receive a variation certificate but sub-paragraph (2) does not apply, they shall publish a notice (a “variation notice”) that—

a

states the day on which it is published,

b

identifies the facility or facilities in respect of which it is published,

c

sets out, for each facility in respect of which the statement in the variation certificate is of the type described in sub-paragraph (1)(b), the date specified for the facility in the variation certificate, and

d

for each facility, indicates the effect of sub-paragraphs (4) to (7) as they apply in the case of the facility.

4

Sub-paragraphs (5) to (7) set out the effect of a variation notice being published in respect of a facility.

5

If—

a

the statement in the variation certificate in respect of the facility is of the type described in sub-paragraph (1)(a), and

b

the day on which the variation notice is published falls before the beginning of the original period,

the notice (“the original notice”) published under paragraph 44(1) in response to the original certificate has effect as if the facility had never been identified in it.

6

If—

a

the statement in the variation certificate in respect of the facility is of the type described in sub-paragraph (1)(a), and

b

the day on which the variation notice is published falls during the original period,

the original notice has effect as if the last day set out for the facility under paragraph 44(2)(c) were the day on which the variation notice is published.

7

If the statement in the variation certificate in respect of the facility is of the type described in sub-paragraph (1)(b), the original notice has effect as if the last day set out for the facility under paragraph 44(2)(c) were the later of—

a

the day on which the variation notice is published, and

b

the day set out in the variation notice for the facility under sub-paragraph (3)(c).

Climate change agreements

46

In this Schedule “climate change agreement” means—

a

an agreement that falls within paragraph 47, or

b

a combination of agreements that falls within paragraph 48.

Climate change agreements: direct agreement with Secretary of State

47

1

An agreement (including one entered into before the passing of this Act) falls within this paragraph if it is an agreement—

a

entered into with the Secretary of State,

b

expressed to be entered into for the purposes of the reduced rate of climate change levy,

c

identifying the facilities to which it applies,

d

to which a representative of each facility to which it applies is a party,

e

setting, or providing for the setting of, targets for the facilities to which it applies,

f

specifying certification periods (as to which see paragraph 49(1)) for the facilities to which it applies, and

g

providing for five-yearly (or more frequent) reviews by the Secretary of State of targets set by or under the agreement for those facilities and for giving effect to outcomes of such reviews.

2

In this paragraph and paragraph 48 “representative”, in relation to a facility to which an agreement applies, means—

a

the person who is the operator of the facility at—

i

the time the agreement is entered into, or

ii

if later, the time the facility last became a facility to which the agreement applies,

or

b

a person authorised by that operator to agree to the facility being a facility to which the agreement applies.

Climate change agreement: combination of umbrella and underlying agreements

48

1

A combination of agreements falls within this paragraph if the following conditions are satisfied.

2

The first condition is that the combination is a combination of—

a

an umbrella agreement (including one entered into before the passing of this Act), and

b

an agreement (including one entered into before the passing of this Act) that, in relation to the umbrella agreement, is an underlying agreement.

3

The second condition is that between them the two agreements—

a

set, or provide for the setting of, targets for the facilities to which the underlying agreement applies,

b

specify certification periods (as to which see paragraph 49(1)) for the facilities to which the underlying agreement applies, and

c

provide for five-yearly (or more frequent) reviews by the Secretary of State of targets set by or under the agreements for those facilities and for giving effect to outcomes of such reviews.

4

For the purposes of this paragraph an “umbrella agreement” is an agreement—

a

entered into with the Secretary of State,

b

expressed to be entered into for the purposes of the reduced rate of climate change levy,

c

identifying the facilities to which it applies, and

d

to which a representative of each facility to which it applies is a party.

5

For the purposes of this paragraph an agreement is an “underlying agreement” in relation to an umbrella agreement if it is an agreement—

a

expressed to be entered into for the purposes of the umbrella agreement,

b

entered into—

i

with the Secretary of State, or

ii

with a party to the umbrella agreement other than the Secretary of State,

c

approved by the Secretary of State if he is not a party to it,

d

identifying which of the facilities to which the umbrella agreement applies are the facilities to which it applies, and

e

to which a representative of each facility to which it applies is a party.

6

In the case of a climate change agreement that is a combination of agreements that falls within this paragraph, references to the facilities to which the climate change agreement applies are references to the facilities to which the underlying agreement applies.

Climate change agreement: supplemental provisions

49

1

The first certification period specified by a climate change agreement for a facility to which it applies shall begin with the later of—

a

the date on which the agreement, so far as relating to the facility, is expressed to take effect, and

b

1st April 2001;

and each subsequent certification period so specified shall begin immediately after the end of a previous certification period.

2

Where a climate change agreement (the “new agreement”) applies to a facility to which another climate change agreement previously applied, the first certification period specified by the new agreement for the facility shall be—

a

a period beginning as provided by sub-paragraph (1), or

b

a period that—

i

begins earlier than that, and

ii

is a period that was a certification period specified for the facility by any climate change agreement that previously applied to the facility.

A period such as is mentioned in paragraph (b) includes a period beginning, or beginning and ending, before the date on which the new agreement, so far as relating to the facility, is expressed to take effect.

3

For the purposes of giving certificates such as are mentioned in paragraphs 44(1) and 45(1), the Secretary of State may take a facility as being covered by a climate change agreement for a period if the facility is one to which the agreement applies and either—

a

that period is the first certification period specified by the agreement for the facility, or

b

that period is a subsequent certification period for the facility and it appears to the Secretary of State that progress made in the immediately preceding certification period towards meeting targets set for the facility by the agreement or by a climate change agreement that previously applied to the facility is, or is likely to be, such as under the provisions of the agreement in question is to be taken as being satisfactory.

4

For the purposes of sub-paragraph (3)(b) a climate change agreement may (in particular) provide that progress towards meeting any targets for a facility is to be taken as being satisfactory if, in the absence (or partial absence) of any such progress required under the agreement, alternative requirements provided for by the agreement are satisfied.

5

For the purposes of sub-paragraphs (2) and (3), the circumstances in which a facility to which a climate change agreement applies is one to which another such agreement previously applied include those where the facility is—

a

a part, or a combination of parts, of a facility to which another such agreement previously applied,

b

a combination of two or more such facilities,

c

any combination of parts of such facilities, or

d

any combination of such facilities and parts of such facilities.

6

Paragraphs 47 and 48 and sub-paragraph (4) above are not to be taken as meaning that an agreement, or combination of agreements, containing provision in addition to any mentioned in those paragraphs and that sub-paragraph is not a climate change agreement.

7

For the purposes of paragraphs 47 and 48 and this paragraph “target”, in relation to a facility to which a climate change agreement applies, means a target relating to—

a

energy, or energy derived from a source of any description, used in the facility or an identifiable group of facilities within which the facility falls, or

b

emissions, or emissions of any description, from the facility or such a group of facilities;

and for this purpose “identifiable group” means a group that is identified in the agreement or that at any relevant time can be identified under the agreement.

8

Nothing in this Schedule is to be taken as requiring the Secretary of State to—

a

enter into any climate change agreement,

b

enter into a climate change agreement with any particular person or persons, in respect of any particular facility or facilities or on any particular terms, or

c

approve any, or any particular, proposed climate change agreement.

Facilities to which climate change agreements can apply

50

1

This paragraph applies where, in connection with concluding or varying a climate change agreement, it falls to be determined whether a facility is to be, or is to continue to be, identified in the agreement as a facility to which the agreement applies.

2

For the purposes of such a determination “facility” is (subject to any regulations under sub-paragraph (3) or (4)) to be taken as meaning—

a

an installation covered by paragraph 51; or

b

a site on which there is or are—

i

such an installation or two or more such installations,

ii

a part, or parts, of such an installation,

iii

a part, or parts, of each of two or more such installations, or

iv

any combination of such installations and parts of such installations.

3

The Secretary of State may by regulations make provision for an installation covered by paragraph 51 to be taken to be a facility for those purposes only if—

a

the taxable commodities supplied to the installation by taxable supplies are intended to be burned (or, in the case of electricity, consumed)—

i

in the installation, or

ii

on the site where the installation is situated but not in the installation,

and

b

the amounts of taxable commodities, and of any other commodities specified in the regulations, subject to each of those intentions are such that any conditions specified in the regulations are satisfied.

4

The Secretary of State may by regulations make provision for a site to be taken to be a facility for those purposes only if—

a

the taxable commodities supplied to the site by taxable supplies are intended to be burned (or, in the case of electricity, consumed)—

i

in installations on the site that are covered by paragraph 51 (or in parts of such installations), or

ii

on the site but not in any such installation (or part of such an installation),

and

b

the amounts of taxable commodities, and of any other commodities specified in the regulations, subject to each of those intentions are such that any conditions specified in the regulations are satisfied.

5

Regulations under sub-paragraph (3) or (4) may make provision for deeming, for the purposes of the regulations, commodities to be intended to be burned (or, in the case of electricity, consumed) in circumstances specified in the regulations.

6

In this paragraph and paragraph 51 “installation” means a stationary technical unit.

Energy-intensive installations

51

1

An installation is covered by this paragraph if it falls within any one or more of the descriptions of installation set out in the Table.

2

An installation is also covered by this paragraph if it is on the same site as, and ancillary to, an installation falling within any one or more of those descriptions.

3

Sub-paragraphs (1) and (2) are subject to any regulations under paragraph 52.

4

For the purposes of sub-paragraph (2), one installation (“the ancillary installation”) is ancillary to another (“the primary installation”) if—

a

the ancillary installation does not fall within any of those descriptions,

b

activities (“the ancillary activities”) are carried out at the ancillary installation that are directly associated with any of the primary activities carried out at the primary installation, and

c

the ancillary activities—

i

have a technical connection with those primary activities, and

ii

could have an effect on environmental pollution or emissions capable of causing such pollution.

5

However, an installation (or part of an installation) used for research, development and testing of new products and processes does not fall within any of those descriptions.

6

In sub-paragraph (4)—

environmental pollution” has the same meaning as in the [1999 c. 24.] Pollution Prevention and Control Act 1999;

primary activity”, in relation to an installation falling within any one or more of the descriptions of installation set out in the Table, means an activity the carrying out of which at the installation results in the installation falling within one or more of those descriptions.

TABLEDescriptions of energy-intensive installations

Energy industries

1

1

Combustion installations with a rated thermal input exceeding 50 MW.

2

Combustion installations operated by the same operator on the same site with a combined rated thermal input exceeding 50 MW.

2

Mineral oil and gas refineries.

3

Coke ovens.

4

Coal gasification and liquefaction plants.

Production and processing of metals

5

Metal ore (including sulphide ore) roasting or sintering installations.

6

Installations for the production of pig iron or steel (primary or secondary fusion) including continuous casting.

7

1

The following installations for the processing of ferrous metals—

a

hot-rolling mills;

b

smitheries with hammers.

2

Installations for the processing of ferrous metals by the application of protective fused metal coats.

8

Ferrous metal foundries.

9

Installations—

a

for the production of non-ferrous crude metals from ore, concentrates or secondary raw materials by metallurgical, chemical or electrolytic processes;

b

for the smelting, including the alloyage, of non-ferrous metals, including recovered products (refining, foundry casting, etc.).

10

Installations for surface treatment of metals and plastic materials using an electrolytic or chemical process.

Mineral industry

11

Installations for the production of—

a

cement clinker in rotary kilns, or

b

lime in rotary kilns or other furnaces.

12

Installations for the production of asbestos and the manufacture of asbestos-based products.

13

Installations for the manufacture of glass including glass fibre.

14

Installations for melting mineral substances including the production of mineral fibres.

15

Installations for the manufacture of ceramic products by firing, in particular roofing tiles, bricks, refractory bricks, tiles, stoneware, stoneware or porcelain.

Chemical industry

16

Installations for the production, on an industrial scale by chemical processing, of basic organic chemicals such as—

a

simple hydrocarbons (linear or cyclic, saturated or unsaturated, aliphatic or aromatic);

b

oxygen-containing hydrocarbons such as alcohols, aldehydes, ketones, carboxylic acids, esters, acetates, ethers, peroxides, epoxy resins;

c

sulphurous hydrocarbons;

d

nitrogenous hydrocarbons such as amines, amides, nitrous compounds, nitro compounds or nitrate compounds, nitriles, cyanates, isocyanates;

e

phosphorus-containing hydrocarbons;

f

halogenic hydrocarbons;

g

organometallic compounds;

h

basic plastic materials (polymers, synthetic fibres and cellulose-based fibres);

i

synthetic rubbers;

j

dyes and pigments;

k

surface-active agents and surfactants.

17

Installations for the production, on an industrial scale by chemical processing, of basic inorganic chemicals such as—

a

gases, such as ammonia, chlorine or hydrogen chloride, fluorine or hydrogen fluoride, carbon oxides, sulphur compounds, nitrogen oxides, hydrogen, sulphur dioxide, carbonyl chloride;

b

acids, such as chromic acid, hydrofluoric acid, phosphoric acid, nitric acid, hydrochloric acid, sulphuric acid, oleum, sulphurous acids;

c

bases, such as ammonium hydroxide, potassium hydroxide, sodium hydroxide;

d

salts, such as ammonium chloride, potassium chlorate, potassium carbonate, sodium carbonate, perborate, silver nitrate;

e

non-metals, metal oxides or other inorganic compounds such as calcium carbide, silicon, silicon carbide.

18

Installations for the production, on an industrial scale by chemical processing, of phosphorous-based, nitrogen-based or potassium-based fertilizers (whether simple or compound).

19

Installations for the production, on an industrial scale by chemical processing, of basic plant health products and of biocides.

20

Installations using a chemical or biological process for the production, on an industrial scale, of basic pharmaceutical products.

21

Installations for the production, on an industrial scale by chemical processing, of explosives.

Waste management

22

Installations for the disposal or recovery of hazardous waste as defined in—

a

the list referred to in Article 1(4) of Council Directive 91/689/EEC,

b

Annex IIA, and headings R1, R5, R6, R8 and R9 of Annex IIB, to Council Directive 75/442/EEC, and

c

Council Directive 75/439/EEC.

23

Installations for the incineration of municipal waste as defined in—

a

Council Directive 89/369/EEC, and

b

Council Directive 89/429/EEC.

24

Installations for the disposal of non-hazardous waste as defined in headings D8 and D9 of Annex IIA to Council Directive 75/442/EEC.

25

Landfills other than landfills of inert waste.

Other activities

26

Industrial plants for the production of—

a

pulp from timber or other fibrous materials;

b

paper and board.

27

Plants for the pre-treatment (operations such as washing, bleaching, mercerisation) or dyeing of fibres or textiles.

28

Plants for the tanning of hides and skins.

29

1

Slaughterhouses.

2

Installations for—

a

the production of food products by the treatment and processing of—

i

animal raw materials (other than milk), or

ii

vegetable raw materials;

b

the treatment and processing of milk.

30

Installations for the disposal or recycling of animal carcases and animal waste.

31

Installations for the intensive rearing of poultry or pigs.

32

Installations for the surface treatment of substances, objects or products using organic solvents, in particular for dressing, printing, coating, degreasing, waterproofing, sizing, painting, cleaning or impregnating.

33

Installations for the production of carbon (hard-burnt coal) or electrographite by means of incineration or graphitization.

Power to vary the installations covered by paragraph 51

52

1

The Treasury may make provision by regulations for varying the installations covered by paragraph 51.

2

The provision that may be made by regulations under this paragraph includes, in particular, provision—

a

for the installations covered by paragraph 51 to include, or not to include, any installation of a description specified in the regulations;

b

amending the Table in paragraph 51 by adding a description of installation to the Table, removing a description of installation from the Table or altering a description of installation set out in the Table;

c

amending paragraph 51.

Part VRegistration

Requirement to be registered

53

1

A person is required to be registered with the Commissioners for the purposes of the levy if a taxable supply is made in respect of which he is the person liable to account for the levy charged.

2

The Commissioners shall, for the purposes of sub-paragraph (1) and in accordance with the provisions of this Part of this Schedule, establish and maintain a register of persons liable to account for levy.

3

The Commissioners shall keep such information in the register as they consider appropriate for the care and management of the levy.

Interpretation of Part V

54

In this Part of this Schedule—

a

references to the register are references to the register maintained under paragraph 53(2);

b

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

c

references to a person’s registration are references to his registration in that register.

Notification of registrability etc.

55

1

A person who—

a

intends to make, or have made to him, any taxable supply in respect of which (if made) he will be the person liable to account for the levy charged, or

b

is required to be registered for the purposes of the levy,

shall (if he is not so registered) notify the Commissioners of that fact.

2

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

3

The amount of the penalty shall be—

a

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

b

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

4

In sub-paragraph (3) “relevant levy” means the levy (if any) for which the person in question is liable to account in respect of taxable supplies made in the period which—

a

begins with the date with effect from which he is required to be registered for the purposes of the levy; and

b

ends with the date on which the Commissioners received notification of, or otherwise first became aware of, the fact that he was required to be registered.

5

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

6

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

a

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

b

a person is assessed to a penalty under paragraph 98 (penalty for evasion),

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

Form of registration

56

1

The Commissioners shall register a person if—

a

they receive from him a notification given in pursuance of paragraph 55, or

b

although they have not received from him such a notification, it appears to them that he is required to be registered.

Where the Commissioners register a person who is required to be registered, they shall register him with effect from the time when the requirement arose.

2

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

3

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

4

The registration of—

a

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

b

an unincorporated body,

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

Notification of loss or prospective loss of registrability

57

1

Where a person who has become liable to give a notification by virtue of paragraph 55 ceases (whether before or after being registered for the purposes of the levy) to intend to make, or to intend to have made to him, taxable supplies in respect of which (if made) he would be the person liable to account for the levy charged, he shall notify the Commissioners of that fact.

2

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

Cancellation of registration

58

1

If the Commissioners are satisfied that a registered person—

a

has ceased to make, or have made to him, taxable supplies on which he is liable to account for the levy charged, and

b

does not intend to make, or have made to him, any such supplies,

they may cancel his registration with effect from such time after he last made, or had made to him, taxable supplies as appears to them to be appropriate.

2

Sub-paragraph (1) applies whether or not the registered person has notified the Commissioners under paragraph 57.

3

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

4

Those conditions are—

a

that the person in question has given a notification under paragraph 57;

b

that no levy due from that person, and no amount recoverable as if it were levy, remains unpaid;

c

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

d

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

5

Where—

a

a registered person notifies the Commissioners under paragraph 57, and

b

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

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

Correction of the register etc.

59

1

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

2

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

a

registered persons, and

b

persons who are required to be registered,

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

Supplemental regulations about notifications

60

1

For the purposes of any provision made by or under this Part of this Schedule for any matter to be notified to the Commissioners, regulations made by the Commissioners may make provision—

a

as to the time within which the notification is to be given;

b

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

c

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

2

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

3

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

Publication of information on the register

61

1

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

a

is derived from the register; and

b

falls within any of the descriptions set out below.

2

The descriptions are—

a

the names of registered persons;

b

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

c

the names of the other bodies corporate which are members of the group.

3

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

Part VICredits and repayments

Tax credits

62

1

The Commissioners may, in accordance with the following provisions of this paragraph, by regulations make provision in relation to cases where—

a

after a taxable supply has been made, there is such a change in circumstances or any person’s intentions that, if the changed circumstances or intentions had existed at the time the supply was made, the supply would not have been a taxable supply;

b

after a supply of a taxable commodity is made on the basis that it is a taxable supply, it is determined that the supply was not (to any extent) a taxable supply;

c

after a taxable supply has been made on the basis that it was neither a half-rate supply nor a reduced-rate supply, it is determined that the supply was (to any extent) a half-rate or reduced-rate supply;

d

levy is accounted for on a half-rate supply as if the supply were neither a half-rate supply nor a reduced-rate supply;

e

after a charge to levy has arisen on a supply of a taxable commodity (“the original commodity”) to a person who uses the commodity supplied in producing taxable commodities primarily for his own consumption, that person makes supplies of any of the commodities in whose production he has used the original commodity;

f

after a person has become entitled to a debt as a result of making a taxable supply, the debt turns out to be bad (in whole or in part);

g

the making of a taxable supply gives rise to a double charge to levy within the meaning of paragraph 21.

2

The provision that may be made in relation to any such case as is mentioned in sub-paragraph (1) is provision—

a

for such person as may be specified in the regulations to be entitled to a tax credit in respect of any levy charged on the supply (or, in such a case as is mentioned in sub-paragraph (1)(g), one of the supplies) in question;

b

for a tax credit to which any person is entitled under the regulations to be brought into account when he is accounting for levy due from him for such accounting period or periods as may be determined in accordance with the regulations; and

c

for a person entitled to a tax credit to be entitled, in any prescribed case where he cannot bring the tax credit into account so as to set it against a liability to levy, to a repayment of levy of an amount so determined.

3

Regulations under this paragraph may contain any or all of the following provisions—

a

provision making any entitlement to a tax credit conditional on the making of a claim by such person, within such period and in such manner as may be prescribed;

b

provision making entitlement to bring a tax credit into account, or to receive a repayment in respect of such a credit, conditional on compliance with such requirements (including the making of a claim) as may be determined in accordance with the regulations;

c

provision requiring a claim for a tax credit to be evidenced and quantified by reference to such records and other documents as may be so determined;

d

provision requiring a person claiming any entitlement to a tax credit to keep, for such period and in such form and manner as may be so determined, those records and documents and a record of such information relating to the claim as may be so determined;

e

provision for the withdrawal of a tax credit where any requirement of the regulations is not complied with;

f

provision for interest at the rate applicable under section 197 of the Finance Act 1996 to be treated as added, for such period and for such purposes as may be prescribed, to the amount of any tax credit;

g

provision for determining whether, and to what extent, a debt is to be taken as bad;

h

provision for the withdrawal of a tax credit to which a person has become entitled in a case within sub-paragraph (1)(f) where any part of the debt that has been taken to be bad falls to be regarded as not having been bad;

i

provision for determining whether, and to what extent, any part of a debt that has been taken to be bad should be regarded as not having been bad;

j

provision for anything falling to be determined in accordance with the regulations to be determined by reference to a general or specific direction given in accordance with the regulations by the Commissioners.

4

Regulations made under this paragraph shall have effect subject to the provisions of paragraph 64.

Repayments of overpaid levy

63

1

Where a person has paid an amount to the Commissioners by way of levy which was not levy due to them, they shall be liable to repay the amount to him.

2

The Commissioners shall not be liable to repay an amount under this paragraph if, or to the extent that, any person has become entitled to a tax credit in respect of that amount by virtue of tax credit regulations.

3

The Commissioners shall not be liable to repay an amount under this paragraph except on the making of a claim for that purpose.

4

A claim under this paragraph must be made in such form and manner, and must be supported by such documentary evidence, as may be required by regulations made by the Commissioners.

5

The preceding provisions of this paragraph are subject to the provisions of paragraph 64.

6

Except as provided by this paragraph or tax credit regulations, the Commissioners shall not, by virtue of the fact that it was not levy due to them, be liable to repay any amount paid to them by way of levy.

Supplemental provisions about repayments etc.

64

1

The Commissioners shall not be liable, on any claim for a repayment of levy, to repay any amount paid to them more than three years before the making of the claim.

2

It shall be a defence to any claim for a repayment of an amount of levy that the repayment of that amount would unjustly enrich the claimant.

3

Sub-paragraph (4) applies for the purposes of sub-paragraph (2) where—

a

there is an amount paid by way of levy which (apart from sub-paragraph (2)) would fall to be the subject of a repayment of levy to any person (“person A”); and

b

the whole or a part of the cost of the payment of that amount to the Commissioners has, for practical purposes, been borne by a person other than person A.

4

Where, in a case to which this sub-paragraph applies, loss or damage has been or may be incurred by person A as a result of mistaken assumptions made in his case about the operation of any provisions relating to levy, that loss or damage shall be disregarded, except to the extent of the quantified amount, in the making of any determination as to—

a

whether or to what extent the repayment of an amount to person A would enrich him; or

b

whether or to what extent any enrichment of person A would be unjust.

5

In sub-paragraph (4) “the quantified amount” means the amount (if any) which is shown by person A to constitute the amount that would appropriately compensate him for loss or damage shown by him to have resulted, for any business carried on by him, from the making of the mistaken assumptions.

6

The reference in sub-paragraph (4) to provisions relating to levy is a reference to any provisions of—

a

any enactment or subordinate legislation (whether or not still in force) which relates to the levy or to any matter connected with it; or

b

any notice published by the Commissioners under or for the purposes of any enactment or subordinate legislation relating to the levy.

Reimbursement arrangements

65

1

The Commissioners may by regulations make provision for reimbursement arrangements made by any person to be disregarded for the purposes of paragraph 64(2) except where the arrangements—

a

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

b

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

2

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

a

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

b

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

3

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

a

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

b

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

c

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

d

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

4

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

a

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

b

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

5

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

Interest payable by the Commissioners

66

1

Where, due to an error on the part of the Commissioners, a person—

a

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

b

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

c

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

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

2

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

3

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

a

do not include any amount payable under this paragraph;

b

do not include the amount of any interest for which provision is made by virtue of paragraph 62(3)(f); but

c

do include any amount due (in respect of an adjustment of overpaid interest) by way of a repayment under paragraph 87(3) or 110(3).

4

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

a

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

b

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

5

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

a

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

b

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

6

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

7

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

a

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

b

any failure by any person to provide the Commissioners—

i

at or before the time of the making of a claim, or

ii

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

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

c

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

8

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

a

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

b

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

i

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

ii

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

iii

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

9

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

10

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

11

References in this paragraph—

a

to receiving payment of any amount from the Commissioners, or

b

to the authorisation by the Commissioners of the payment of any amount,

include references to the discharge by way of set-off (whether in accordance with regulations under paragraph 73 or 74 or otherwise) of the Commissioners’ liability to pay that amount.

12

Interest under this paragraph shall be payable at the rate applicable under section 197 of the [1966 c. 8.] Finance Act 1996.

Assessment for excessive repayment

67

1

Where—

a

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

b

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

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

2

Where—

a

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

b

the repayment is in respect of a tax credit the entitlement to which arose in a case falling within paragraph 62(1)(f) (tax credit where all or part of a debt is bad),

c

the whole or any part of the credit is withdrawn on account of any part of the debt taken as bad falling to be regarded as not having been bad, and

d

the amount paid exceeded the amount which the Commissioners would have been liable to repay to that person had that withdrawal been taken into account,

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

3

Where any person is liable to pay any amount to the Commissioners in pursuance of an obligation imposed by virtue of paragraph 65(4)(a), the Commissioners may, to the best of their judgement, assess the amount due from that person and notify it to him.

4

Subject to sub-paragraph (5), where—

a

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

b

the Commissioners have power under Part VII of this Schedule to make an assessment on that person to an amount of levy due from that person for that period,

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

5

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

Assessment for overpayments of interest

68

Where—

a

any amount has been paid to any person by way of interest under paragraph 66, but

b

that person was not entitled to that amount under that paragraph,

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

Assessments under paragraphs 67 and 68

69

1

An assessment under paragraph 67 or 68 shall not be made more than two years after the time when evidence of facts sufficient in the opinion of the Commissioners to justify the making of the assessment comes to the knowledge of the Commissioners.

2

Where an amount has been assessed and notified to any person under paragraph 67 or 68, it shall be recoverable as if it were levy due from him.

3

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

Interest on amounts assessed

70

1

Where an assessment is made under paragraph 67 or 68, the whole of the amount assessed shall carry interest, for the period specified in sub-paragraph (2), as follows—

a

so much of that amount as represents the amount of a tax credit claimed by a person who was not entitled to it (but not any amount assessed under paragraph 67(2)) shall carry penalty interest;

b

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

2

That period is the period which—

a

begins with the day after that on which the person is notified of the assessment; and

b

ends with the day before that on which payment is made of the amount assessed.

3

Interest under this paragraph shall be paid without any deduction of income tax.

4

Penalty interest under this paragraph shall be compound interest calculated—

a

at the penalty rate, and

b

with monthly rests.

5

For this purpose the penalty rate is the rate found by—

a

taking the rate applicable under section 197 of the Finance Act 1996 for the purposes of sub-paragraph (1)(b); and

b

adding 10 percentage points to that rate.

6

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

7

Subject to sub-paragraph (8), where the person concerned satisfies the Commissioners or, on appeal, an appeal tribunal that there is a reasonable excuse for the conduct giving rise to the liability to pay penalty interest, that is a matter which (among other things) may be taken into account under sub-paragraph (6).

8

In determining whether there is a reasonable excuse for the purposes of sub-paragraph (7), no account shall be taken of any of the following matters, that is to say—

a

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

b

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

c

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

9

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

Assessments to interest under paragraph 70

71

1

Where any person is liable to interest under paragraph 70 the Commissioners may assess the amount due by way of interest and notify it to him accordingly.

2

Without prejudice to the power to make assessments under this paragraph for later periods, the interest to which an assessment under this paragraph may relate shall be confined to interest for a period of no more than two years ending with the time when the assessment under this paragraph is made.

3

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

4

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

5

Where an assessment is made under this paragraph to an amount of interest under paragraph 70—

a

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

b

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

6

Where—

a

an assessment to interest is made specifying a date for the purposes of sub-paragraph (5)(a), and

b

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

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

Supplementary assessments

72

If it appears to the Commissioners that the amount which ought to have been assessed in an assessment under paragraph 67, 68 or 71 exceeds the amount which was so assessed, then—

a

under the same paragraph as that assessment was made, and

b

on or before the last day on which that assessment could have been made,

the Commissioners may make a supplementary assessment of the amount of the excess and notify the person concerned accordingly.

Set-off of or against amounts due under this Schedule

73

1

The Commissioners may by regulations make provision in relation to any case where—

a

a person is under a duty to pay to the Commissioners at any time an amount or amounts in respect of levy; and

b

the Commissioners are under a duty to pay to that person at the same time an amount or amounts in respect of levy or any of the other taxes under their care and management.

2

Regulations under this paragraph may provide that if the total of the amount or amounts mentioned in sub-paragraph (1)(a) exceeds the total of the amount or amounts mentioned in sub-paragraph (1)(b), the latter shall be set off against the former.

3

Regulations under this paragraph may provide that if the total of the amount or amounts mentioned in sub-paragraph (1)(b) exceeds the total of the amount or amounts mentioned in sub-paragraph (1)(a), the Commissioners may set off the latter in paying the former.

4

Regulations under this paragraph may provide that if the total of the amount or amounts mentioned in sub-paragraph (1)(a) is the same as the total of the amount or amounts mentioned in sub-paragraph (1)(b) no payment need be made in respect of the former or the latter.

5

Regulations under this paragraph may provide for any limitation on the time within which the Commissioners are entitled to take steps for recovering any amount due to them in respect of levy to be disregarded, in such cases as may be described in the regulations, in determining whether any person is under such a duty to pay as is mentioned in sub-paragraph (1)(a).

6

Regulations under this paragraph may include provision treating any duty to pay mentioned in sub-paragraph (1) as discharged accordingly.

7

References in sub-paragraph (1) to an amount in respect of a particular tax include references not only to an amount of tax itself but also to other amounts such as interest and penalties that are or may be recovered as if they were amounts of tax.

8

In this paragraph “tax” includes duty.

Set-off of or against other taxes and duties

74

1

The Commissioners may by regulations make provision in relation to any case where—

a

a person is under a duty to pay to the Commissioners at any time an amount or amounts in respect of any tax (or taxes) under their care and management other than levy; and

b

the Commissioners are under a duty, at the same time, to make any repayment of levy to that person or to make any other payment to him of any amount or amounts in respect of levy.

2

Regulations under this paragraph may provide that if the total of the amount or amounts mentioned in sub-paragraph (1)(a) exceeds the total of the amount or amounts mentioned in sub-paragraph (1)(b), the latter shall be set off against the former.

3

Regulations under this paragraph may provide that if the total of the amount or amounts mentioned in sub-paragraph (1)(b) exceeds the total of the amount or amounts mentioned in sub-paragraph (1)(a), the Commissioners may set off the latter in paying the former.

4

Regulations under this paragraph may provide that if the total of the amount or amounts mentioned in sub-paragraph (1)(a) is the same as the total of the amount or amounts mentioned in sub-paragraph (1)(b) no payment need be made in respect of the former or the latter.

5

Regulations under this paragraph may provide for any limitation on the time within which the Commissioners are entitled to take steps for recovering any amount due to them in respect of any of the taxes under their care and management to be disregarded, in such cases as may be described in the regulations, in determining whether any person is under such a duty to pay as is mentioned in sub-paragraph (1)(a).

6

Regulations under this paragraph may include provision treating any duty to pay mentioned in sub-paragraph (1) as discharged accordingly.

7

References in sub-paragraph (1) to an amount in respect of a particular tax include references not only to an amount of tax itself but also to other amounts such as interest and penalties that are or may be recovered as if they were amounts of tax.

8

In this paragraph “tax” includes duty.

Restriction on powers to provide for set-off

75

1

Regulations made under paragraph 73 or 74 shall not require any such amount or amounts as are mentioned in sub-paragraph (1)(b) of that paragraph (“the credit”) to be set against any such amount or amounts as are mentioned in sub-paragraph (1)(a) of that paragraph (“the debit”) in any case where—

a

an insolvency procedure has been applied to the person entitled to the credit;

b

the credit became due after that procedure was so applied; and

c

the liability to pay the debit either arose before that procedure was so applied or (having arisen afterwards) relates to, or to matters occurring in the course of, the carrying on of any business at times before the procedure was so applied.

2

For the purposes of this paragraph, an insolvency procedure is applied to a person if—

a

a bankruptcy order, winding-up order or administration order is made in relation to that person or an award of sequestration is made on that person’s estate;

b

that person is put into administrative receivership;

c

that person passes a resolution for voluntary winding up;

d

any voluntary arrangement approved in accordance with—

i

Part I or VIII of the [1986 c. 45.] Insolvency Act 1986, or

ii

Part II or Chapter II of Part VIII of the [S.I 1989/2405 (N.I 19.).] Insolvency (Northern Ireland) Order 1989,

comes into force in relation to that person;

e

a deed of arrangement registered in accordance with—

i

the [1914 c. 47.] Deeds of Arrangement Act 1914, or

ii

Chapter I of Part VIII of that Order,

takes effect in relation to that person;

f

a person is appointed as the interim receiver of some or all of that person’s property under section 286 of the Insolvency Act 1986 or Article 259 of the Insolvency (Northern Ireland) Order 1989;

g

a person is appointed as the provisional liquidator in relation to that person under section 135 of that Act or Article 115 of that Order;

h

an interim order is made under Part VIII of that Act, or Chapter II of Part VIII of that Order, in relation to that person; or

i

that person’s estate becomes vested in any other person as that person’s trustee under a trust deed (within the meaning of the [1985 c. 66.] Bankruptcy (Scotland) Act 1985).

3

In this paragraph references, in relation to any person, to the application of an insolvency procedure to that person shall not include—

a

the making of a bankruptcy order, winding-up order, administration order or award of sequestration at a time when any such arrangement or deed as is mentioned in paragraph (d), (e) or (i) of sub-paragraph (2) is in force in relation to that person;

b

the making of a winding-up order at any of the following times, that is to say—

i

immediately upon the discharge of an administration order made in relation to that person;

ii

when that person is being wound up voluntarily;

iii

when that person is in administrative receivership;

or

c

the making of an administration order in relation to that person at any time when that person is in administrative receivership.

4

For the purposes of this paragraph a person shall be regarded as being in administrative receivership throughout any continuous period for which (disregarding any temporary vacancy in the office of receiver) there is an administrative receiver of that person.

5

In this paragraph—

administration order” means an administration order under section 8 of the [1986 c. 45.] Insolvency Act 1986 or Article 21 of the [S.I. 1989/2405 )N.I. 19.] Insolvency (Northern Ireland) Order 1989;

administrative receiver” means an administrative receiver within the meaning of section 251 of that Act or Article 5(1) of that Order.

Part VI: supplemental provisions

76

1

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

2

In this paragraph “representative”, in relation to any person, means—

a

any of that person’s personal representatives;

b

that person’s trustee in bankruptcy or liquidator;

c

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

d

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

3

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

a

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

b

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

4

The powers conferred by paragraphs 73 and 74 are without prejudice to any power of the Commissioners to provide by tax credit regulations for any amount to be set against another.

Part VIIRecovery and interest

Recovery of levy as debt due

77

Levy shall be recoverable as a debt due to the Crown.

Assessments of amounts of levy due

78

1

Where it appears to the Commissioners—

a

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

b

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

c

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

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

2

The defaults falling within this sub-paragraph are—

a

any failure to make a return required to be made by any provision made by or under this Schedule;

b

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

c

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

d

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

e

any failure to comply with a requirement imposed by or under Part V of this Schedule (registration).

3

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

4

In a case where—

a

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

b

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

c

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

d

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

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

5

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

6

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

Supplementary assessments

79

1

If, where an assessment has been notified to any person under paragraph 78 or this paragraph, it appears to the Commissioners that the amount which ought to have been assessed as due for any accounting period exceeds the amount that has already been assessed, the Commissioners may make a supplementary assessment of the amount of the excess and notify that person accordingly.

2

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

3

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

Time limits for assessments

80

1

An assessment under paragraph 78 or 79 of an amount of levy due for any accounting period—

a

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

b

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

2

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

3

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

a

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

b

in circumstances giving rise to liability to a penalty under paragraph 55 (failure to notify of registrability etc.), or

c

as a result of conduct falling within paragraph 98(1) (evasion),

that levy may be assessed under paragraph 78 or 79 as if, in sub-paragraph (1)(b) above, for “three years” there were substituted “twenty years”.

4

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

a

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

b

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

i

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

ii

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

5

Nothing in this paragraph shall prejudice the powers of the Commissioners under paragraph 78(4).

Ordinary interest on overdue levy paid before assessment

81

1

Where—

a

the circumstances are such that an assessment could have been made under paragraph 78 or 79 of an amount of levy due from any person, but

b

before such an assessment was made and notified to that person that amount was paid (so that no such assessment was necessary),

the whole of the amount paid shall carry interest for the period specified in sub-paragraph (2).

2

That period is the period which—

a

begins with the day after that on which the person is required in accordance with regulations under paragraph 41 to pay levy due from him for the accounting period to which the amount paid relates; and

b

ends with the day before that on which the amount is paid.

3

Interest under this paragraph shall be payable at the rate applicable under section 197 of the [1966 c. 8.] Finance Act 1996.

Penalty interest on unpaid levy

82

1

Where—

a

a person makes a return for the purposes of any regulations made under paragraph 41 (whether or not at the time required by the regulations), and

b

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

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

2

That period is the period which—

a

begins with the day after that on which the person is required in accordance with regulations under paragraph 41 to pay levy due from him for the accounting period in question; and

b

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

Penalty interest on levy where no return made

83

1

Where—

a

the Commissioners make an assessment under paragraph 78 or 79 of an amount of levy due from any person for any accounting period and notify it to him, and

b

the assessment is made at a time after the time by which a return is required by regulations under paragraph 41 to be made by that person for that accounting period and before any such return has been made,

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

2

That period is the period which—

a

begins with the day after that on which the person is required in accordance with regulations under paragraph 41 to pay levy due from him for the accounting period in question; and

b

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

3

Where the person, after the assessment is made, makes for the purposes of any regulations under paragraph 41 a return for the accounting period in question, the assessed amount shall not carry penalty interest under this paragraph to the extent that that amount is shown in the return as an amount of levy due from him for that accounting period (and, accordingly, carries penalty interest under paragraph 82).

Ordinary and penalty interest on under-declared levy

84

1

Subject to sub-paragraph (4), where—

a

the Commissioners make an assessment under paragraph 78 or 79 of an amount of levy due from any person for any accounting period and notify it to him,

b

the assessment is made after a return for the purposes of any regulations under paragraph 41 has been made by that person for that accounting period, and

c

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

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

2

That period is the period which—

a

begins with the day after that on which the person is required in accordance with regulations under paragraph 41 to pay levy due from him for the accounting period in question; and

b

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

3

Interest under this paragraph—

a

in respect of so much of the period specified in sub-paragraph (2) as falls before the day on which the assessment is notified to the person in question, shall be payable at the rate applicable under section 197 of the [1996 c. 8.] Finance Act 1996 for the purposes of paragraph 81(3); and

b

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

4

Where—

a

the Commissioners make an assessment under paragraph 78 or 79 of an amount of levy due from any person for any accounting period and notify it to him,

b

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

c

the amount assessed is paid on or before that date,

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

Penalty interest on unpaid ordinary interest

85

1

Subject to sub-paragraph (2), where the Commissioners make an assessment under paragraph 88 of an amount of interest payable at the rate given by paragraph 81(3), that amount shall carry penalty interest for the period which—

a

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

b

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

2

Where—

a

the Commissioners make an assessment under paragraph 88 of an amount of interest due from any person,

b

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

c

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

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

Penalty interest

86

1

Penalty interest under any of paragraphs 82 to 85 shall be compound interest calculated—

a

at the penalty rate, and

b

with monthly rests.

2

For this purpose the penalty rate is the rate found by—

a

taking the rate applicable under section 197 of the [1996 c. 8.] Finance Act 1996 for the purposes of paragraph 81(3); and

b

adding 10 percentage points to that rate.

3

Where a person is liable under any of paragraphs 82 to 85 to pay any penalty interest, the Commissioners or, on appeal, an appeal tribunal may reduce the amount payable to such amount (including nil) as they think proper.

4

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

5

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

a

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

b

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

c

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

6

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

Supplemental provisions about interest

87

1

Interest under any of paragraphs 81 to 85 shall be paid without any deduction of income tax.

2

Sub-paragraph (3) applies where—

a

an amount carries interest under any of paragraphs 81 to 85 (or would do so apart from that sub-paragraph); and

b

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

3

In such a case—

a

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

b

all such adjustments as are reasonable shall be made, including (subject to paragraphs 64 to 76) adjustments by way of repayment.

Assessments to interest

88

1

Where a person is liable for interest under any of paragraphs 81 to 85, the Commissioners may assess the amount due by way of interest and notify it to him accordingly.

2

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

3

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

4

Sub-paragraph (3)—

a

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

i

in accordance with paragraph 85, or

ii

in so far as it falls to be compounded in accordance with paragraph 86;

and

b

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

5

Paragraph 80 shall apply in relation to assessments under this paragraph as if any assessment to interest were an assessment under paragraph 78 to levy due for the period which is the relevant accounting period in relation to that interest.

6

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

a

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

b

is also assessed under paragraph 78 or 79 for the accounting period which is the relevant accounting period in relation to that interest,

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

7

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

8

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

a

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

b

in the case of interest on interest (whether under paragraph 85 or by virtue of any compounding under paragraph 86), the period which is the relevant accounting period for the interest on which the interest is payable.

9

In a case where—

a

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

b

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

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

Further assessments to penalty interest

89

1

Where an assessment is made under paragraph 88 to an amount of penalty interest under any of paragraphs 82 to 85—

a

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

b

if the interest continues to accrue after that date, a further assessment or further assessments may be made under paragraph 88 in respect of the amounts so accruing.

2

Where—

a

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

b

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

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

Walking possession agreements

90

1

This paragraph applies where—

a

in accordance with regulations under section 51 of the [1997 c. 16.] Finance Act 1997 (enforcement by distress), a distress is authorised to be levied on the goods and chattels of a person (“the person in default”) who has refused or neglected to pay an amount of levy due from him or an amount recoverable from him as if it were levy; and

b

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

2

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

a

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

b

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