Finance Act 1967

• (2) The Treasury may, by order in a statutory instrument, subject to annulment in pursuance of a resolution of the Commons House of Parliament, from time to time increase or decrease the rate of interest prescribed by subsection (1) above, either for the purposes of all the enactments mentioned in that subsection, or so as to prescribe different rates for different purposes.

• (3) Subsection (1) above shall apply to interest for any period beginning on or after 19th April 1967 whether or not interest runs from before that date; and any variation of the rate of interest prescribed under subsection (2) above shall apply to interest for periods beginning on or after the date when the order is expressed to come into force, whether or not interest runs from before that date.

• (4) Interest charged under the said section 495(1) or the said section 58(1) shall be treated for the purposes—

• (a) of sections 74, 76, 78 and 79 of the Income Tax Act 1952 and of section 8 of the Income Tax Management Act 1964 (recovery of tax by distress or in court proceedings), and

• (b) of section 35(2)(g)(i) of the Crown Proceedings Act 1947 (rules of court to impose restrictions on set-off and counterclaim where the proceedings, or set-off or counterclaim, relate to taxes) and of any rules of court (including county court rules) for England and Wales or Northern Ireland, made before or after the passing of this Act, which impose such a restriction, and

• (c) of section 35(2)(b) of the said Act of 1947 as set out in section 50 of that Act (which imposes corresponding restrictions in Scotland),

as if it were tax charged and due and payable under the assessment to which it relates.

• (5) In section 495(3)(b) of the Income Tax Act 1952 (exemption for interest not exceeding one pound) five pounds shall be substituted for one pound as respects tax becoming due and payable on or after 19th April 1967.

• (6) Without prejudice to the general interpretative provisions of this Act, this section applies to the enactments mentioned in subsection (1) above as extended by any other enactment, and in particular—

• (a) it applies to sections 495(1) of the Income Tax Act 1952 and section 58(1) of the Finance Act 1960 as extended to capital gains tax and corporation tax, and

• (b) it applies to section 8 of the Finance (No. 2) Act 1947 as extended to the excess profits levy.

Provisional collection of taxes.

41

• (1) The Provisional Collection of Taxes Act 1913, section 265 of the Customs and Excise Act 1952 (security for new duties) and section 49(6) of the Finance Act 1965 (assessment of corporation tax before passing of annual Act) shall apply to resolutions of the House of Commons and not to resolutions of the Committee of Ways and Means, and accordingly shall have effect subject to the repeals in Part IX of Schedule 16 to this Act.

• (2) A resolution having statutory effect under section 1 of the Provisional Collection of Taxes Act 1913 shall cease to have statutory effect unless within the next twenty-five days on which the House sits after the day on which the resolution is passed—

• (a) a Bill varying or renewing the tax is read a second time by the House of Commons, or

• (b) a Bill is amended by the House of Commons so as to include provision for the variation or renewal of the tax.

Proviso (a) to section 1(1) of the said Act of 1913 (which required a Bill varying or renewing the tax to have been read a second time within twenty sitting days after the resolution of the Committee of Ways and Means is agreed to by the House) shall cease to have effect, and the said section 1(1) shall be construed as one with this subsection.

• (3) The period for which a resolution shall have statutory force under section 1 of the Provisional Collection of Taxes Act 1913 shall, if the resolution is passed in March or April in any year, expire with 5th August in the same calendar year, and section 1(2) of the said Act shall have effect subject to this subsection.

• (4) Section 1 of the Provisional Collection of Taxes Act 1913 shall apply to a resolution of the House of Commons providing for the repeal or abolition of an existing tax (within the meaning of that Act) as it applies to such a resolution providing for the variation of any existing tax; and in relation to a resolution to which this subsection applies, the references in subsection (2) above and in proviso (b) to the said section 1(1) to the variation of the tax by a Bill or an Act shall be construed as references to its repeal or abolition by, as the case may require, a Bill or an Act.

• (5) Section 49(6) of the Finance Act 1965 shall apply to a resolution passed in March or April in any year as if for the period of four months from the passing of the resolution referred to in that subsection (as a period within which an assessment may be made by virtue of the resolution) there were substituted a reference to a period beginning with the passing of the resolution and ending with 5th August in the same calendar year.

• (6) In subsection (1) of section 265 of the Customs and Excise Act 1952 (which restricts that section to new duties of customs or excise in respect of any goods) the words " in respect of any goods " shall cease to have effect.

• (7) This and the next following section shall come into force on such date, not earlier than 1st September 1967, as may be appointed by the Treasury by order in a statutory instrument.

• (8) This and the next following section shall not affect the Provisional Collection of Taxes Act 1913 as that Act applies to the House of Commons of the Parliament of Northern Ireland.

Collection of taxes before passing of ways and means resolutions.

42

Quorum of Special Commissioners in tax cases.

43

Loans to Government of Northern Ireland.

44

Citation, interpretation, construction, extent and repeals.

45

• (1) This Act may be cited as the Finance Act 1967.

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) In this Act—

• (a) Part I (except sections 8 to 12 and Schedules 7 and 8) shall be construed as one with the Customs and Excise Management Act 1979,

• (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (g) Part V shall be construed as one with the Stamp Act 1891, and

• (h) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (5) The following provisions of this Act, namely, section 5(1) so far as it relates to the Licensing (Scotland) Acts 1959 and 1962 and Schedule 8, shall be included in the enactments which may be cited together as the Licensing (Scotland) Acts 1959 to 1967.

• (6) Any reference in this Act to any other enactment shall, except so far as the context otherwise requires, be construed as a reference to that enactment as amended or applied by or under any other enactment, including this Act.

• (7) Except as otherwise expressly provided, such of the provisions of this Act as relate to matters in respect of which the Parliament of Northern Ireland has power to make laws shall not extend to Northern Ireland.

• (8) The enactments mentioned in Schedule 16 to this Act are hereby repealed to the extent mentioned in the third column of that Schedule, but subject to any provision in relation thereto made at the end of any Part of that Schedule.

SCHEDULE 1—

SCHEDULE 2—

SCHEDULES 3, 4—

SCHEDULE 4

SCHEDULE 5—

Hydrocarbon oils—revised definition of light oils

1

As from 1st October 1967, for the definition of " light oils " in section 195(1) of the Act of 1952 there shall be substituted the following definition—

• " light oils " means hydrocarbon oils— of which not less than ninety per cent. by volume distils at a temperature not exceeding two hundred and ten degrees centigrade ; or which give off an inflammable vapour at a temperature of less than twenty-three degrees centigrade when tested in the manner prescribed by the Acts relating to petroleum.

Drawback on exportation, etc., of beer

2

The provisions of section 137 of the Act of 1952 as to the allowance of drawback on the exportation, removal to the Isle of Man or shipment as stores by any person of such beer as is mentioned in paragraph (a) or paragraph (b) of subsection (1) of that section shall apply to any such beer which it is shown to the satisfaction of the Commissioners is being exported, or removed or shipped as aforesaid, as an ingredient of other goods.

Remission of duty on goods spoilt or destroyed, etc.

3

The provisions of section 263(3) of the Act of 1952 (which relates to the remission or repayment of duty on certain materials destroyed, spoilt or otherwise unfit for use) shall apply to any worts or beer which have been destroyed or become spoilt or otherwise unfit for use by unavoidable accident while on the entered premises of a brewer for sale notwithstanding that they were not manufactured by that brewer; and accordingly in the said section 263(3) the words " manufacturered by that trader " shall cease to have effect.

Remission or repayment of excise duty on beer used for purposes of research or experiment

4

• (1) Where it is proved to the satisfaction of the Commissioners that any beer chargeable with the duty of excise is to be used only for the purposes of research or of experiments in brewing, the Commissioners may, if they think fit and subject to such conditions as they see fit to impose, remit or repay the excise duty chargeable on that beer.

• (2) If any person contravenes or fails to comply with any condition imposed under sub-paragraph (1) of this paragraph he shall be liable, in addition to any other penalty he may have incurred, to a penalty of fifty pounds.

• (3) In section 125(3) of the Act of 1952 (which provides that a licence to brew beer shall not be required for the brewing of beer only for certain purposes) after the word " employment " there shall be inserted the words " or for the brewing of beer (with the authority of the Commissioners and subject to compliance with such conditions as they see fit to impose) solely for the purposes of research or of experiments in brewing ".

SCHEDULE 6—

A. The Customs and Excise Act 1952 (15 & 16 Geo. 6 & 1 Eliz. 2 c. 44)

1

In section 117(3), for the words " retailer's on-licence " there shall be substituted the words " justices' on-licence ".

2

In section 160(2), for the words " the premises in respect of which he holds his retailer's licence " there shall be substituted the words " any premises at which he sells spirits by retail ".

3

In section 161(1)—

• (a) for the words " this Act " there shall be substituted the words " this or some other Act ";

• (b) for the words " a licence to sell spirits " there shall be substituted the words " a licence as a dealer in spirits or a justices' licence authorising him to sell spirits ".

4

For section 162(4) there shall be substituted the following subsection:—

(4) Nothing in this section shall apply to any liquor which is prepared— (a) on any premises in respect of which a justices' on-licence is in force ; or (b) in any registered club ; or (c) in any theatre, or on board any aircraft, vessel or vehicle, in the case of which, by virtue of section 199(c) or (d) of the Licensing Act 1964 or, in Scotland, by virtue of section 198(b) or (d) of the Licensing (Scotland) Act 1959, a justices' licence is not required, for immediate consumption on those premises, in that club, at that theatre, or on board that aircraft, vessel or vehicle, as the case may be.

5

In section 248, at the end there shall be added the following subsection—

(3) Subsection (1) of this section shall apply to any of the following in or from which intoxicating liquor is sold by retail, namely, any road or rail vehicle, vessel, aircraft, hover vehicle or structure, as it applies to premises; and in this subsection the expression " hover vehicle " means a vehicle designed to be supported on a cushion of air.

6

In section 307(1), in the paragraph beginning " excise trader ", at the end there shall be added the words " and includes a registered club ".

7

In section 307(1), after the paragraph which, as amended, begins " justices' certificate " there shall be inserted the following paragraph:—

• " justices' licence " and " justices' on-licence "— in the application of this Act to England and Wales have the meanings respectively assigned by sections 1(1) and 1(2)(a) of the Licensing Act 1964 and in both cases include a canteen licence granted under Part X and an occasional licence granted under section 180 of that Act; in the application of this Act to Scotland mean respectively— a certificate granted under section 32(1) of the Licensing (Scotland) Act 1959 ; and any such certificate as aforesaid, not being an off-sale certificate as defined in section 32(2)(c) of the said Act of 1959 ; and in this paragraph any reference to a certificate granted under section 32(1) of the said Act of 1959 includes a reference to any special permission granted to the holder of such a certificate under section 60 of that Act, a reference to a licence granted under Part III of that Act (which relates to seamen's canteens), and a reference to a special permission granted under section 18 of the Licensing (Scotland) Act 1962 ; in the application of this Act to Northern Ireland mean a licence or justices' certificate corresponding to the relevant licence such as is mentioned in paragraph (a) of this definition.

8

In section 307(1), for the paragraph beginning " registered club " there shall be substituted the following paragraph:—

• " registered club " means a club which is for the time being registered within the meaning of the Licensing Act 1964 or which is for the time being a registered club within the meaning of the Licensing (Scotland) Act 1959 or which is for the time being a registered club within the meaning of the Registration of Clubs Acts (Northern Ireland) 1904 to 1966.

9

In section 307(1), for the paragraph beginning " retailer " there shall be substituted the following paragraph :—

• " retailer " means— in relation to intoxicating liquor, a person who sells such liquor by retail; in relation to methylated spirits, a person holding a licence under section 117 of this Act.

B. The Finance Act 1959 (7 & 8 Eliz. 2. c. 58)

10

In section 3, for so much of subsection (4) as precedes the table set out therein there shall be substituted the following—

(4) A dealer shall not be entitled to relief from duty under subsection (2) or subsection (3) of section 169 of the Customs and Excise Act 1952 unless his trade is discontinued within nine months after the commencement of the licence year; and notwithstanding anything in subsection (5) of that section the relief shall consist of such proportion of the full amount of duty for the year as is specified in the following table in relation to the month during which the trade is discontinued, that is to say—

C. The Finance Act 1960 (8 & 9 Eliz. 2. c. 44)

11

In section 3(1)(a), for the words " under a retailer's licence " there shall be substituted the words " by retail ".

D. Application to Northern Ireland

12

For the avoidance of doubt it is hereby declared that the provisions of this Schedule other than paragraphs 1 and 10 thereof extend to Northern Ireland but, so far as they relate to matters with respect to which the Parliament of Northern Ireland has power to make laws, shall be deemed for the purposes of section 6 of the Government of Ireland Act 1920 to have been passed before the day appointed for the purposes of that section.

SCHEDULE 7

1

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2

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3

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4

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5

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6

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7

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8

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9

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10

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11

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12

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13

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14

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15

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16

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17

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18

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19

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20

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21

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22

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23

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Transitional provision

24

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SCHEDULE 8

A. The Licensing (Scotland) Act 1959 (7 & 8 Eliz. 2. c. 51)

1

At the end of section 57, there shall be added the following proviso:—

Provided also that the holder of an off-sale certificate may not sell spirits or wine (including British wine within the meaning of the Customs and Excise Act 1952) in open vessels ; and any such holder who does so shall be liable on a first conviction to a fine not exceeding ten pounds, and on a subsequent conviction to a fine not exceeding twenty pounds.

2

In section 66(1), for the words " a kind of retailer's on-licence other than that requested by the applicant " there shall be substituted the words " the types of liquor (including, if the court thinks fit, types of liquor other than those in respect of which the application for the licence was made) which may be sold under the licence. ".

3

In section 68(1), for the words " licences " and " those licences " there shall be substituted respectively the words " licence " and " that licence ".

4

In section 69, for paragraphs (b) and (c) there shall be substituted the following—

(b) on an application for the grant of a licence under this Part of this Act, specify, as types of liquor which may be sold under the licence, types other than those in respect of which the application for the licence was made ; or (c) on an application for renewal of a licence under this Part of this Act, do not comply with any request duly made by the applicant for a change in the specification of the types of liquor which may be sold under the licence ; or

.

5

In section 134(2), for the words " an excise licence for the sale of exciseable liquor " there shall be substituted the words " a certificate ".

6

In section 135(2), for the words " an excise licence for the sale of exciseable liquor " there shall be substituted the words " a certificate ".

7

In section 141(1), for the words " an excise licence " there shall be substituted the words " a certificate ".

8

At the end of section 144 there shall be added the following subsection:—

(6) This section shall apply to any premises or place where exciseable liquor is sold under a special permission as it applies to the bar 6f the licensed premises of the holder of the special permission.

.

9

In section 161, for the words from " in respect of which no certificate is held " to " has been granted)" there shall be substituted the words " to which section 198(b) of this Act applies) ".

10

In section 164(4), for the words " no excise licence for the sale of exciseable liquor is in force " there shall be substituted the words " none of the following is in force, that is to say—

• (a) a certificate ;

• (b) a licence under Part III of this Act;

• (c) a certificate of registration under Part XI of this Act."

11

In section 173, in paragraph (1), for the words " an excise licence " there shall be substituted the words " a certificate or a wholesaler's excise licence ".

12

In section 198, for paragraph (a) there shall be substituted the following—

(a) make unlawful trafficking in exciseable liquor in a canteen held under the authority of a Secretary of State;

.

13

In section 198, for paragraph (b) there shall be substituted the following—

(b) make unlawful trafficking in exciseable liquor in a theatre erected before 1st January 1904 ;

.

14

In section 198, for paragraph (d) there shall be substituted the following—

(d) make unlawful trafficking, with passengers in an aircraft, vessel or railway passenger vehicle, in exciseable liquor for consumption on board the aircraft or vessel or in the railway passenger vehicle if the aircraft or vessel is employed for the carriage of passengers and is being flown or navigated from a place in the United Kingdom to another such place or from and to the same place in the United Kingdom on the same day, or, as the case may be, if the railway passenger vehicle is a vehicle in which passengers can be supplied with food;

.

15

In Schedule 3, in the paragraph beginning " Does the applicant hold ", for the words " an excise licence for the sale of exciseable liquor " there shall be substituted the words " a certificate under the Licensing (Scotland) Act 1959, or a licence under Part III of that Act " ; and for the words " that licence " there shall be substituted the words " that certificate or, as the case may be, that licence " ; and, in the paragraph beginning " Has the applicant any interest ", for the words " an excise licence for the sale of exciseable liquor " there shall be substituted the words " a certificate under the Licensing (Scotland) Act 1959 or a licence under Part III of that Act " ,

and for the words " a certificate " there shall be substituted the words " such a certificate or licence ".

16

In Schedule 6, in paragraph 3, for the words " the kind of retailer's on-licence which is desired " there shall be substituted the words " the types of liquor which it is desired to sell under the licence ".

17

In Schedule 8, in paragraph 4(1)(a), for the words " liquors for the sale of which an excise licence is required," there shall be substituted the words " exciseable liquor ".

B. The Licensing (Scotland) Act 1962 (10 & 11 Eliz. 2. c. 51)

18

At the end of section 14 there shall be added the following subsection:—

(9) Subsections (1) to (4), (6) and (7) of this section shall apply to any premises or place where exciseable liquor is sold under a special permission as they apply to the licensed premises of the holder of the special permission.

.

19

In section 16, in subsection (1), for the word " an " there shall be substituted the words " a wholesaler's ".

20

In section 21, for subsection (3) there shall be substituted the following subsection:—

(3) In this section the expression " passenger vessel " means a vessel of any description employed for the carriage of passengers which goes from any place in the United Kingdom to any other such place, or goes from and returns to the same place in the United Kingdom on the same day.

SCHEDULE 9—

1

In section 102(2)(b), for the words from " and delivered " onwards there shall be substituted the words " a proper spirits advice note or spirits consignment note ".

2

In section 146(3), for the words " subsection (6) of section one hundred and eight of this Act " there shall be substituted the words " section 6(3) of the Finance Act 1967 ".

3

In section 241 as amended by Schedule 1 to the Finance Act 1960—

• (a) in subsection (1A), after the word " that " there shall be inserted the words " a spirits advice note or ";

• (b) in subsection (2)—

• (i) for the words from " deliver " to " produce a " there shall be substituted the words " keep or produce a spirits advice note ";

• (ii) for the words " permit or note " there shall be substituted the words " note or, as the case may be, the note and any copy thereof ".

4

In section 242(1) as amended by the said Schedule 1—

• (a) for the words from " permit " where it first occurs to the word " goods " where it first occurs there shall be substituted the words " spirits advice note ";

• (b) in paragraph (aa), after the word " proper " there shall be inserted the words " spirits advice note or ";

• (c) in paragraphs (c), (d) and (e) for the word " permit " there shall be substituted the words " spirits advice note ".

5

In section 242(2)—

• (a) for the words from " required " to " permit " where first occurring there shall be substituted the words " in connection with the removal of which a spirits advice note is required by or under the customs or excise Acts ";

• (b) for the words from " permit " in the second place where it occurs to " permit " in the third place where it occurs there shall be substituted the words " spirits advice note having been duly sent or in contravention of section 6(3) of the Finance Act 1967, or in the case of which an altered or untrue spirits advice note has been sent ".

6

In section 243, for the word " permit " in both places where it occurs, there shall be substituted the words " spirits advice note ".

7

In the proviso to section 253(3), for the words " this Act as to permits for the " there shall be substituted the words " section 6(2) and (3) of the Finance Act 1967 in connection with the sending out or other ".

SCHEDULE 10—

Trading losses

1

• (1) If in any accounting period ending after the passing of this Act the one company has incurred a loss, computed as for the purposes of section 58(2) of the Finance Act 1965 (set-off of loss against total profits), in carrying on a trade, the amount of the loss may be set off for purposes of corporation tax against the total profits of the other company for its corresponding accounting period.

• (2) Sub-paragraph (1) above shall not apply to so much of a loss as is excluded from the said section 58(2) by subsection (4) of that section (trades falling under Case V of Schedule D, trades not carried on on a commercial basis, etc.), or by section 22 of this Act.

• (3) In the case of a claim made by a company as a member of a consortium only a fraction of the amount of the loss may be set off under sub-paragraph (1) above, and that fraction shall be equal to that member's share in the consortium, subject to any further reduction under paragraph 6(2) of this Schedule.

Capital allowances

2

• (1) If for any accounting period ending after the passing of this Act any capital allowances fall to be made to the one company which are to be given by discharge or repayment of tax and are to be available primarily against a specified class of income, so much of the amount of those capital allowances (exclusive of any carried forward from an earlier period) as exceeds its income of the relevant class arising in that accounting period (before deduction of any losses of any other period or of any capital allowances) may be set off for purposes of corporation tax against the total profits of the other company for its corresponding accounting period.

• (2) In the case of a claim made by a company as a member of a consortium only a fraction of the excess referred to in sub-paragraph (1) above may be so set off, and that fraction shall be equal to that member's share in the consortium, subject to any further reduction under paragraph 6(2) of this Schedule.

Expenses of management

3

• (1) If for any accounting period ending after the passing of this Act the one company (being an investment company) may under section 57(1) of the Finance Act 1965 deduct any amount as expenses of management disbursed for that accounting period, so much of that amount (exclusive of any amount only deductible by virtue of subsection (2) of the said section 57) as exceeds the company's profits of that accounting period may be set off for purposes of corporation tax against the total profits of the other company (whether an investment company or not) for its corresponding accounting period.

• (2) The surrendering company's profits of the period shall be determined for the purposes of this paragraph without any deduction under the said section 57 and without regard to any deduction falling to be made in respect of losses or allowances of any other period.

• (3) References in this paragraph to section 57 of the Finance Act 1965 do not include references to that section as applied by section 69 of that Act to companies carrying on life assurance business.

• (4) In the case of a claim made by a company as a member of a consortium only a fraction of the amount of the excess referred to in sub-paragraph (1) above may be set off under that sub-paragraph, and that fraction shall be equal to that member's share in the consortium, subject to any further reduction under paragraph 6(2) of this Schedule.

Charges on income

4

• (1) If in any accounting period ending after the passing of this Act the one company has paid any amount by way of charges on income, so much of that amount as exceeds its profits of the period may be set off for purposes of corporation tax against the total profits of the other company for its corresponding accounting period.

• (2) The surrendering company's profits of the period shall be determined for the purposes of this paragraph without regard to any deduction falling to be made in respect of losses or allowances of any other period, or to expenses of management only deductible by virtue of subsection (2) of section 57 of the Finance Act 1965.

• (3) In the case of a claim made by a company as a member of a consortium only a fraction of the excess referred to in sub-paragraph (1) above may be set off under that sub-paragraph, and that fraction shall be equal to that member's share in the consortium, subject to any further reduction under paragraph 6(2) of this Schedule.

Relation of group relief to other relief

5

• (1) Group relief for an accounting period shall be allowed as a deduction against the claimant company's total profits for the period before reduction by any relief derived from a subsequent accounting period, but as reduced by any other relief from tax.

• (2) The said other relief shall be determined on the assumption that the company makes all relevant claims under section 58(2) and section 56(6) of the Finance Act 1965 (set-off of trading losses and capital allowances against total profits).

• (3) The said other relief includes relief under section 52(1) of the Finance Act 1965 (charges on income), and notwithstanding the requirement in the said section 52(1) that the relief is to be against total profits as reduced by any other relief, group relief shall not affect relief under the said section 52(1).

• (4) For the purposes of this paragraph " relief derived from a subsequent accounting period " means—

• (a) relief under section 58(2) of the Finance Act 1965 in respect of a loss incurred in an accounting period after the accounting period the profits of which are being computed, and

• (b) relief under section 56(6) of that Act in respect of capital allowances falling to be made for an accounting period after the accounting period the profits of which are being computed, and

• (c) relief under section 87 of that Act (transitional relief on cessation of trade etc.) where the company ceases to possess the source of income in question at a time after the end of the accounting period the profits of which are being computed, and

• (d) relief under section 59 of that Act (terminal loss in a trade) in respect of a loss incurred in an accounting period after the end of the accounting period the profits of which are being computed.

• (5) The reductions to be made in total profits of an accounting period against which any relief derived from a subsequent accounting period is to be set off shall include any group relief for that first-mentioned accounting period, and this sub-paragraph shall have effect notwithstanding that under section 87(3) of the Finance Act 1965 relief under that section is to be given in priority to any other relief.

Corresponding accounting periods

6

• (1) For the purposes of this Schedule any accounting period of the claimant company which falls wholly or partly within an accounting period of the surrendering company corresponds to that accounting period.

• (2) If an accounting period of the surrendering company and a corresponding accounting period of the claimant company do not coincide—

• (a) the amount which may be set off against the total profits of the claimant company for the corresponding accounting period shall be reduced by applying the fraction $AB$ (if that fraction is less man unity), and

• (b) the said profits against which the amount mentioned in paragraph (a) above (as reduced where so required) may be set off shall be reduced by applying the fraction $AC$ (if that fraction is less than unity),

where

• " A " is the length of the period common to the two accounting periods,

• " B " is the length of the accounting period of the surrendering company, and

• " C " is the length of the corresponding accounting period of the claimant company.

Companies joining or leaving group or consortium

7

Subject to paragraph 8 below, group relief shall be given if, and only if, the surrendering company and the claimant company are members of the same group, or fulfil the conditions for relief for a consortium, throughout the whole of the surrendering company's accounting period to which the claim relates, and throughout the whole of the corresponding accounting period of the claimant company.

8

• (1) This paragraph has effect where on any occasion two companies become or cease to be members of the same group.

• (2) For the purposes specified below it shall be assumed as respects each company that on that occasion (unless a true accounting period of the company begins or ends then) an accounting period of the company ends, and a new one begins, the new accounting period to end with the end of the true accounting period (unless before then there is a further break under this sub-paragraph), and—

• (a) that the losses or other amounts of the true accounting period are apportioned to the component accounting periods on a time basis according to their lengths, and

• (b) that the amount of total profits for the true accounting period of the company against which group relief may be allowed in accordance with paragraph 5(1) of this Schedule is also so apportioned to the component accounting periods.

• (3) Where the one company is the surrendering company and the other company is the claimant company—

• (a) references to accounting periods, to profits, and to losses, allowances, expenses of management or charges on income of the surrendering company, in paragraphs 1 to 4 of this Schedule shall be construed in accordance with sub-paragraph (2) above,

• (b) references to accounting periods in paragraphs 6 and 7 of this Schedule shall be so construed (so that if the two companies are members of the same group in the surrendering company's accounting period, they must under paragraph 6 also be members of the same group in any corresponding accounting period of the claimant company),

• (c) references to profits, and amounts to be set off against the profits, in the said paragraph 6 shall be so construed (so that an amount apportioned under sub-paragraph (2) above to a component accounting period may fall to be reduced under the said paragraph 6(2)).

• (4) This paragraph shall apply with the necessary modifications where a company begins or ceases to fulfil the conditions for relief for a consortium, either as a surrendering company or as a claimant company, as it applies where two companies become or cease to be members of the same group.

Exclusion of double allowances, etc.

9

• (1) Relief shall not be given more than once in respect of the same amount, whether by giving group relief and by giving some other relief (in any accounting period) to the surrendering company, or by giving group relief more than once.

• (2) In accordance with sub-paragraph (1) above, two or more claimant companies cannot, in respect of any one loss or other amount for which group relief may be given, and whatever their accounting periods corresponding to that of the surrendering company, obtain in all more relief than could be obtained by a single claimant company whose corresponding accounting period coincided with the accounting period of the surrendering company.

• (3) If claims for group relief are made by more than one claimant company which relate to the same accounting period of the same surrendering company, and—

• (a) all the claims so made are admissible only by virtue of paragraph 8 above, and

• (b) there is a part of the surrendering company's accounting period during which none of those claimant companies is a member of the same group as the surrendering company,

those claimant companies shall not obtain in all more, relief than could be obtained by a single claimant company which was not a member of the same group as the surrendering company during that part of the surrendering company's accounting period (but was a member during the remainder of that accounting period).

• (4) If claims for group relief are made by a claimant company as respects more than one surrendering company for group relief to be set off against its total profits for any one accounting period, and—

• (a) all the claims so made are admissible only by virtue of paragraph 8 above, and

• (b) there is a part of the claimant company's accounting period during which none of the surrendering companies by reference to which the claims are made is a member of the same group as the claimant company,

the claimant company shall not obtain in all more relief to be set off against its profits for the accounting period than it could obtain on a claim as respects a single surrendering company (with unlimited losses and other amounts eligible for relief) which was not a member of the same group as the claimant company during that part of the claimant company's accounting period (but was a member during the remainder of that accounting period).

• (5) The provisions of this sub-paragraph have effect as respects a claim for group relief made by a company as a member of a consortium, in this sub-paragraph referred to as a " consortium claim "—

• (a) a consortium claim, and a claim other than a consortium claim, shall not both have effect as respects the loss or other amount of the same accounting period of the same surrendering company, unless each of the two claims is as respects a loss or other amount apportioned under paragraph 8(2)(a) above to a component of that accounting period, and the two components do not overlap.

• (b) in sub-paragraphs (3) and (4) above consortium claims shall be disregarded,

and paragraph (a) above shall take effect according to the order in which claims are made.

• (6) Without prejudice to the provisions of section 331(5) of the Income Tax Act 1952, any reference in Part X of that Act to an allowance made includes a reference to an allowance which would be made but for the granting of group relief, or but for that and but for an insufficiency of profits or other income against which to make it.

Claims and adjustments

10

• (1) A claim for relief under this Schedule—

• (a) need not be for the full amount available,

• (b) shall require the consent of the surrendering company notified to the inspector in such form as the Board may require, and

• (c) must be made within two years from the end of the surrendering company's accounting period to which the claim relates.

• (2) A claim for group relief by a company as a member of a consortium shall require the consent of each other member of the consortium, notified to the inspector in such form as the Board may require, in addition to the consent of the surrendering company.

• (3) If the inspector discovers that any group relief which has been given is or has become excessive he may make an assessment to tax under Case VI of Schedule D in the amount which ought in his opinion to be charged.

This sub-paragraph is without prejudice to the making of an assessment under section 5(3)(c) of the Income Tax Management Act 1964, and to the making of all such other adjustments by way of discharge or repayment of tax or otherwise as may be required where a claimant company has obtained too much relief, or a surrendering company has forgone relief in respect of a corresponding amount.

The three-year surplus

11

Paragraphs 1 to 5 and 9 of this Schedule (as they relate either to a surrendering company or to a claimant company) shall not affect the calculation of the three-year surplus under section 85(6) of the Finance Act 1965 as amended by Schedule 7 to the Finance Act 1966.

Companies with overseas trading income

12

If under paragraph 3(4)(b) of Schedule 20 to the Finance Act 1965 the appropriate fraction of a loss incurred by one company is set off (for the purposes of section 84(3) of that Act) against income of another company, group relief in respect of that part of the loss shall be left out of account in any computation under the said section 84(3) as respects that other company or any other company.

Cancellation of tax advantages from certain transactions in securities

13

• (1) The reference in section 28(2)(a) of the Finance Act 1960 to a person being entitled by reason of any exemption from tax to recover tax in respect of dividends received by him shall include a reference to his being so entitled by reason of the giving of group relief.

• (2) Where a company in the circumstances mentioned in section 28(2)(b) of that Act becomes entitled to a deduction as there mentioned, that section shall apply in relation to any tax advantage which in consequence of that deduction is obtained or obtainable by another company by way of group relief, as if obtained or obtainable by the other company in circumstances falling within the said paragraph (b).

SCHEDULE 11—

PART I — General

Life assurance business: relief for management expenses

1

• (1) In section 69(2) of the Finance Act 1965 (which restricts relief for management expenses for life assurance companies not charged to tax under Case I of Schedule D by reference to the corporation tax which would be payable if they were so charged) the following shall be substituted for the words from the beginning of the subsection to the end of paragraph (b):—

(2) Relief in respect of management expenses shall not be given to any such company, whether under section 62 of this Act or under subsection (1) above, so far as it would, if given in addition to all other reliefs to which the company is entitled, reduce the income tax and corporation tax borne by the company on the income and gains of its life assurance business for any accounting period to less than would have been paid if the company had been charged to tax in respect of that business under Case I of Schedule D ; and where relief has been withheld in respect of any accounting period by virtue of this subsection, the excess to be carried forward by virtue of section 57(2) of this Act shall be increased accordingly.

• (2) Sub-paragraph (1) above shall have effect for accounting periods ending on or after 6th April 1966.

Life assurance business: repayment of tax on investment income

2

• (1) Section 69(7) of the Finance Act 1965 (which prohibits, in general, the repayment of income tax on the policy holders' share of the franked investment income from investments held in connection with a company's life assurance business) shall have effect in relation to any income as if, for the reference to such part of it as belongs or is allocated to, or is reserved for or expended on behalf of, policy holders, there were substituted a reference to the part of it specified in sub-paragraph (3) below.

• (2) Section 427(2) of the Income Tax Act 1952 (under which, where the tax on its investment income exceeds seven shillings and sixpence in the pound, a company is entitled, notwithstanding the said section 69(7), to repayment of the excess on the policy holders' share) shall have effect in relation to any income as if, for the references in paragraphs (a) and (b) to such part of it as, in the opinion of the Commissioners, belongs or is allocated to, or is reserved for or expended on behalf of, policy holders, there were substituted references to the part specified in sub-paragraph (3) below of so much of that income as has not been excluded from charge to tax by virtue of any provision and against which no relief has been allowed by deduction or set-off.

• (3) The said part shall be, in the case of any income, the same fraction of it as the fraction which, on a computation of the profits of the company in respect of its life assurance business in accordance with the provisions applicable to Case I of Schedule D (whether or not the company is in fact charged to tax under that Case for the relevant accounting period or periods) would be connoted by the words in section 427(1) of the said Act of 1952 " such part of those profits as belongs or is allocated to, or is reserved for, or expended on behalf of, policy holders or annuitants ":

Provided that, if the income exceeds the profits as computed in accordance with those provisions other than the said section 427(1), the said part shall be that fraction of the income so far as not exceeding the profits, together with the amount of the excess.

• (4) Sub-paragraph (2) above shall not affect the said section 427(2) as it applies by virtue of the said section 69 to chargeable gains.

• (5) Sub-paragraphs (1) and (2) above shall have effect, as respects income tax, for the year 1966-67 as well as subsequent years of assessment and, as respects corporation tax, for accounting periods ending on or after 6th April 1965.

• (6) For the avoidance of doubt, it is hereby declared that the reference in the said section 69(7) to repayment of income tax includes a reference to the setting off of income tax against tax which the company is liable to pay in respect of its own distributions.

• (7) The said section 69(7), as amended by sub-paragraph (1) above, shall not be taken to apply to repayments of income tax under section 62 of the said Act of 1965.

• (8) Paragraph 9(3) of Schedule 5 to the Finance Act 1966 (which provides that franked investment income by virtue of which annuities have been treated as charges on income shall be left out of account under section 48 of the said Act of 1965) shall have effect, and be deemed always to have had effect, as if, for the words " shall be left out of account under section 48 of the Finance Act 1965 ", there were substituted the words " shall be income the tax on which is not available for set-off against income tax which the company is liable to pay in respect of its own distributions ".

Company distributions: transfers between companies and their members or participators

3

• (1) Schedule 11 to the Finance Act 1965 (which defines company distributions for the purposes of Part IV of that Act) shall have effect, and be deemed always to have had effect, subject to the amendments specified in sub-paragraphs (2) and (3) below.

• (2) At the end of paragraph 1(2) of that Schedule (which relates to the transfer of assets and liabilities between companies and their members) there shall be inserted the following proviso:—

Provided that, where the company and the member receiving the benefit are both resident in the United Kingdom and either the former is a subsidiary of the latter or both are subsidiaries of a third company also so resident (the question whether one body is another's subsidiary being determined as if for the purposes of section 48(3) of this Act, subject to the modification that a body shall be treated as not being the owner of any share capital which it owns directly if a profit on the sale of the shares would be treated as a trading receipt of that body), the said amount shall not be treated as a distribution.

• (3) After the proviso to paragraph 9(2) of that Schedule (which relates to the provision by close companies of benefits for participators) there shall be inserted the following additional proviso:—

And provided also that where— (a) the company and the participator are both resident in the United Kingdom and one is a subsidiary of the other or both are subsidiaries of a third company also so resident (the question whether one body is another's subsidiary being determined as if for the purposes of section 48(3) of this Act, subject to the modification that a body shall be treated as not being the owner of any share capital which it owns directly if a profit on the sale of the shares would be treated as a trading receipt of that body), and (b) the benefit to the participator arises on or in connection with a transfer of assets or liabilities by the company to him or to the company by him, the said amount shall not be treated as a distribution.

• (4) If any amount would, but for sub-paragraph (2) or (3) above, be treated as, or as part of, a distribution made in or after the year 1966-67 and would as so treated constitute also the net amount of a relevant distribution within the meaning of section 65 of the Finance Act 1965 (dividend stripping) then, for the purposes of corporation tax in respect of any chargeable gains, that amount shall be treated as if it were a capital distribution (within the meaning of Part III of the Finance Act 1965) received in respect of the holding.

• (5) Sub-paragraphs (2) and (3) above shall not affect the meaning of 'distribution' for the purposes of paragraphs 5, 6(1) and 7 of Schedule 17 to the Finance Act 1965 (dividend stripping: relation of distributions to profits), except so far as the said sub-paragraphs (2) and (3) relieve the company from liability to account for income tax otherwise falling under paragraph 5(1) of the said Schedule 17 to be included in a distribution.

• (6) There shall be made all such adjustments by way of discharge or repayment of tax as are necessary to give effect to the preceding provisions of this paragraph.

Dividend stripping

4

• (1) Section 65(6) of the Finance Act 1965 (election for treatment of dividends as group income: exclusion of relevant distributions) shall cease to have effect.

• (2) Section 65(3) of the Finance Act 1965 (relevant distribution received by a company which is not a dealer: net amount of relevant distribution to be treated as a capital distribution in respect of the holding) shall apply to group income as if in the phrase " the net amount of the relevant distribution " the word " net " were omitted.

• (3) The said section 65 shall be deemed always to have had effect subject to this paragraph, and there shall be made all such adjustments by way of discharge or repayment of tax as are necessary to give effect to its provisions.

Tax on company in liquidation

5

• (1) In this paragraph references to a company's final year are references to the financial year in which the affairs of the company are completely wound up, and references to a company's penultimate year are references to the last financial year preceding its final year.

• (2) Corporation tax shall be charged on the profits of the company arising in the winding-up in its final year at a rate which, subject to sub-paragraph (3) below, shall be the rate of corporation tax fixed for the penultimate year.

• (3) If the affairs of the company are completely wound up before an Act is passed fixing the rate of corporation tax for its penultimate year, corporation tax shall be charged on the company's profits arising in the winding-up in its final year, and if the winding-up commenced before the final year, on the company's profits arising at any time in its penultimate year, at the rate of corporation tax fixed by the budget resolution for the penultimate year (and without regard to the rate fixed by any subsequent Act); and any assessment made by virtue of section 49(5) of the Finance Act 1965 (provisional rate of tax) shall be subject to any such adjustment, by discharge or repayment of tax or by a further assessment, as may be required to give effect to this sub-paragraph.

• (4) An assessment on the company's profits for an accounting period which falls after the commencement of the winding-up shall not be invalid because made before the end of the accounting period.

• (5) In making an assessment after the commencement of the winding up of the company but before the date when its affairs are completely wound up, the inspector may, with the concurrence of the liquidator, act on an assumption as to when that date will fall, so far as it governs section 51(6) of the Finance Act 1965 (company's accounting period or accounting periods beginning with commencement of winding up).

• (6) The assumption of the wrong date shall not alter the company's final and penultimate year, and if the right date is later an accounting period shall end on the date assumed, and a new accounting period shall begin and the said section 51(6) shall thereafter apply as if that new accounting period began with the commencement of the winding up.

• (7) In this paragraph " budget resolution " means a resolution of the Committee of Ways and Means of the House of Commons, or of the House of Commons, for fixing the rate of corporation tax for the financial year in question, and if there is more than one such resolution, means the first of them.

• (8) This paragraph shall have effect as respects any winding up completed after the passing of this Act.

Close company: 35 per cent. test for quoted shares

6

• (1) In paragraph 1(3) of Schedule 18 to the Finance Act 1965 (under which certain companies with quoted shares are not close companies) " beneficially held by the public " shall be construed in accordance with this paragraph, and a corresponding construction shall be given to the reference to shares which have been allotted unconditionally to, or acquired unconditionally by, the public.

• (2) Shares shall be deemed to be beneficially held by the public if, and only if, sub-paragraph (3) below so provides, and if they are not within the exceptions in paragraph (a), (b) or (c) of the said paragraph 1(3) (shares held by a director of the company or his associate or by certain other companies) or within the exception in sub-paragraph (4) below.

• (3) Shares shall be deemed to be beneficially held by the public—

• (a) if beneficially held by a company resident in the United Kingdom which is not a close company, or by a company not so resident which would not be a close company if it were so resident, or

• (b) if held on trust for a fund or scheme approved under section 379 or section 388 of the Income Tax Act 1952 (superannuation funds and retirement schemes), or

• (c) if they are not comprised in a principal member's holding.

• (4) Shares shall not be deemed to be held by the public if held as part of any fund the capital or income of which is applicable or applied wholly or mainly for the benefit of, or of the dependants of, the employees or directors, or past employees or directors, of the company, or of any company within paragraph (b) or (c) of the said paragraph 1(3).

• (5) In paragraphs (a), (b) and (c) of the said paragraph 1(3) references to shares held by any person include references to any shares the rights or powers attached to which could be attributed to that person under paragraph 3(3) of Schedule 18 to the Finance Act 1965.

• (6) The said paragraph 1(3) shall not apply at any time when the total percentage of the voting power in the company possessed by all the principal members of the company exceeds 85 per cent.

• (7) For the purposes of this paragraph a person is a principal member of a company if he possesses a percentage of the voting power in the company of more than 5 per cent. and, where there are more than five such persons, if he is one of the five persons who possess the greatest percentages or if, because two or more persons possess equal percentages of the voting power in the company, there are no such five persons, he is one of the six or more persons (so as to include those two or more who possess equal percentages) who possess the greatest percentages.

• (8) In arriving at the voting power which a person possesses there shall be attributed to him any voting power which would be attributed to him for the purposes of paragraph 3 of Schedule 18 to the Finance Act 1965 (definition of control) by sub-paragraphs (3) and (4) of that paragraph (nominees, controlled companies and associates).

• (9) A principal member's holding consists of the shares which carry the voting power possessed by him.

• (10) This paragraph shall be deemed to have come into force on 11th April 1967.

Computation of close company's distributable profits

7

• (1) In paragraph 7(1) of Schedule 18 to the Finance Act 1965 for the words

(b) any franked investment income, less the amount of any relief given against it for management expenses or charges on income

there shall be substituted the words

(b) any franked investment income, less the amount of any relief given against it under subsection (1) or subsection (7) of section 62 of this Act

so that paragraph (b) refers to all relief under the said section 62, and not only to relief given under that section against management expenses or charges on income.

• (2) For the purposes of the said paragraph 7 as it applies to any company in any accounting period the amount on which corporation tax falls finally to be borne (but not the amount of that tax) shall be computed as if the said section 62 did not include subsection (5) of that section (which, as extended by subsection (6) of that section, makes an adjustment where in any year of assessment distributions exceed franked investment income so as to allow losses, allowances, management expenses or charges on income against which franked investment income arising in an earlier year of assessment has been set off to be carried forward).

• (3) This paragraph shall have effect as respects franked investment income arising in the year 1966-67 or in subsequent years of assessment.

Close companies in liquidation

8

• (1) Sections 77 and 78 of the Finance Act 1965 (shortfall in distributions of close company, and apportionment for surtax of close company's income) shall, notwithstanding the winding-up of a company, or the passing of any resolution or the making of any order or anything else done for the winding up of a company, continue to apply as if the company were not being wound up.

• (2) Paragraph 12 of Schedule 18 to the Finance Act 1965 (modification of the required standard for ascertaining shortfall in distributions of close company) shall apply for any accounting period ending after the date of a winding-up resolution or other event mentioned in paragraph 13(1) of that Schedule.

• (3) Where any such event occurs in the case of a close company, then any assessment on the company in respect of a shortfall in distributions for an accounting period after that event shall be an assessment as for a distribution made immediately before the end of that accounting period, and the amount due under the assessment shall be recoverable accordingly.

• (4) Paragraph 13(3) of the said Schedule 18 (which is superseded by this paragraph) shall cease to have effect.

• (5) This paragraph has effect as respects accounting periods beginning after 11th April 1967.

Close companies: " director " and " associate "

9

It is hereby declared that in paragraph 6(2)(c) and paragraph 6(3) of Schedule 18 to the Finance Act 1965 (definitions of director) the expression " either on his own or with one or more associates " requires a person to be treated as owning or as the case may be controlling what any associate owns or controls even if he does not own or control share capital on his own, and that—

• (a) in the proviso to the said paragraph 6(3) the expression " apportioned to him together with his associates (if any) ", and

• (b) in paragraph 18(1)(b) of Schedule 5 to the Finance Act 1966 (definition of associate) the expression " either on his own or with his relatives "

have a corresponding meaning.

PART II — Collection of Tax on Company Distributions and other Payments

Assessments

10

• (1) Income tax which has become due in accordance with paragraph 2(3) of Schedule 12 to the Finance Act 1965 (tax in respect of distributions and other payments to which paragraph 1 of that Schedule applies) may be assessed on the company (whether or not it has been paid when the assessment is made) if that tax, or any part of it, is not paid on or before the due date.

• (2) Paragraph 2(4) of the said Schedule 12 (distributions not included in returns, and estimated assessments) shall apply to payments to which paragraph 1 of that Schedule applies which are not distributions as it applies to payments which are distributions.

• (3) Any tax assessable under sub-paragraph (1) above and any tax assessable under the said paragraph 2(4) may be included in one assessment if the tax so included is all due on the same date, and Schedule 12 to the Finance Act 1965, paragraph 17 of Schedule 6 to the Finance Act 1966 and this Part of this Schedule shall apply to tax assessable or assessed under sub-paragraph (1) above as they apply to tax assessable or assessed under the said paragraph 2(4).

• (4) All the provisions of the Income Tax Acts as to the time within which an assessment may be made, so far as they refer or relate to the year of assessment for which an assessment is made, or the year of assessment to which an assessment relates, shall apply to an assessment under the said Schedule 12 (including an assessment under sub-paragraph (1) above) notwithstanding that, under the provisions of the said Schedule 12, the assessment may be said to relate to a month rather than to a year of assessment, and the provisions of section 47(1) of the Income Tax Act 1952 and of section 51 of the Finance Act 1960 as to the circumstances in which an assessment may be made out of time shall apply accordingly on the footing that any such assessment relates to the year of assessment the standard rate for which is the rate at which tax is charged by the assessment.

Relief for income tax on franked investment income and other company income

11

• (1) Where a claim has been made under paragraph 3 of the said Schedule 12 no proceedings for collecting tax which would fall to be discharged if the claim were allowed shall be instituted pending the final determination of the claim, but this sub-paragraph shall not affect the date when the tax is due.

• (2) When the claim is finally determined any tax underpaid in consequence of sub-paragraph (1) above shall be paid.

• (3) Where proceedings are instituted for collecting tax assessed, or interest on tax assessed, under paragraph 10(1) of this Schedule or paragraph 2(4) or (5) of the said Schedule 12, effect shall not be given to any claim made after the institution of the proceedings so as to affect or delay the collection or recovery of the tax charged by the assessment or of interest thereon, until the claim has been finally determined.

• (4) When the claim is finally determined any tax overpaid in consequence of sub-paragraph (3) above shall be repaid.

Due date of tax

12

• (1) An appeal against an assessment under the said Schedule 12 (including an assessment under, paragraph 10(1) above) shall not affect the date when the tax is due under paragraph 2(3) of that Schedule, and in paragraph 5(1) of that Schedule the words " subject to any appeal against the assessment " shall have effect subject to this sub-paragraph:

Provided that this sub-paragraph shall not apply to an appeal of which notice has been given to the inspector before 25th April 1967.

• (2) On the determination of any such appeal any tax overpaid shall be repaid.

• (3) Section 58 of the Finance Act 1960 (interest on tax recovered to make good loss due to a taxpayer's fault) shall not apply in relation to tax under the said Schedule 12.

Adjustments at end of year.

13

Where the amount of any tax payable in accordance with sub-paragraph (2) of paragraph 1 of the said Schedule 12 (adjustment at end of year) is agreed between the company and the inspector—

• (a) the making of an assessment charging that tax, or an appeal against the assessment, shall not affect the date when the tax is due (that is to say, as provided by paragraph 5(1) of the said Schedule 12, fourteen days after the tax is so agreed), and

• (b) the power of making an assessment under sub-paragraph (3) of the said paragraph 1 shall include power to make an assessment of the tax on that company if that tax, or any part of it, is not paid within the said fourteen days after the tax is so agreed (whether or not it has been paid when the assessment is made).

Interest on tax

14

• (1) It is hereby declared that paragraph 5(3) of the said Schedule 12 (which applies section 495 of the Income Tax Act 1952 relating to interest on overdue income tax) applies to income tax which, in accordance with that Schedule, is paid without the making of any assessment (but is paid after it is due), and that where the tax is charged by an assessment (whether or not any part of it has been paid when the assessment is made) it applies as respects interest running before as well as after the making of the assessment.

• (2) Section 495(3)(b) of the Income Tax Act 1952 (exemption where interest on tax charged by an assessment does not exceed one pound, or where the amendment made by this Act has effect, five pounds) shall have effect as so applied—

• (a) as if all tax due from a company in accordance with paragraph 2(3) of the said Schedule 12 for any month, whether or not it is actually assessed, were included in a single assessment, and

• (b) as if all tax due from a company in accordance with paragraph 1(2) of the said Schedule 12 for any year, whether or not it is actually assessed, were included in a single assessment.

• (3) The discharge or repayment of tax in respect of distributions, or payments other than distributions, made in any month in a year of assessment by setting off, under paragraph 3 of the said Schedule 12, income tax in respect of any franked investment income or other payment received in a later month in that year shall not affect interest under section 495 of the Income Tax Act 1952 on the tax so discharged or repaid—

• (a) for any period before the expiration of fourteen days from the end of the later month, unless the claim is made on an earlier date (but after the end of that later month); and

• (b) if the claim is made on an earlier date (but after the end of the later month), any period ending before that earlier date.

• (4) Subject to sub-paragraph (3) above, the said section 495 shall apply as if any such tax which is discharged or repaid had never become payable.

• (5) Paragraph 5(3) of Schedule 12 to the Finance Act 1965 shall not be read as applying section 496 of the Income Tax Act 1952 by applying section 495 of that Act.

• (6) In this paragraph " month " has the same meaning as in paragraph 2(2) of the said Schedule 12.

Exclusion of interest on tax up to 19th November 1966

15

No tax under the said Schedule 12 shall carry interest from a date earlier than 19th November 1966.

Commencement and construction

16

• (1) This Part of this Schedule shall be construed as one with Schedule 12 to the Finance Act 1965 and shall have effect as if it had been enacted when that Act was enacted.

• (2) References in this Part of this Schedule to proceedings for the collection of tax include references to proceedings by way of distraint or poinding for tax.

SCHEDULE 12—

Interpretation

1

In this Schedule, the expression " the principal Act " means the Selective Employment Payments Act 1966.

Restrictions on payments under section 25

2

Subsection (1) or (2) of section 25 of this Act shall not apply—

• (a) if the employment in question of the employed person was in, or carried out from, an establishment for the time being registered under section 7(1) of the principal Act, unless the employer shows that he is not entitled to a payment in respect of that person and the contribution week in question under section 1 or 2 of that Act; or

• (b) if the employer is entitled in respect of the employed person and the week in question to a payment under section 5 or 6 of the principal Act; or

• (c) if the employed person's employment is an excepted employment as defined in section 10(1) of the principal Act other than employment in the Post Office Savings Bank; or

• (d) if the employer is an employer to whom section 3 of the principal Act applies, unless the employed person was employed in the week in question in a part of the employer's business which is specified in Part II of Schedule 1 to that Act; or

• (e) if the employer is, or the employed person is treated for the purposes of section 4 of the principal Act as employed by, an employer to whom the said section 4 applies ; or

• (f) if the employer is a national health service employer, that is to say, is a body specified in Schedule 3 to the Redundancy Payments Act 1965 ;