Finance Act 1967

and subsection (1) of the said section 25 shall not apply in relation to an employed person in respect of whom the employer is entitled in respect of the week in question to a payment under subsection (2) of that section.

3

The Minister shall not be required to make any payment in respect of any employed person and any contribution week under subsection (1) of the said section 25 unless the employer produces such records as the Minister may reasonably require—

• (a) of the payment of selective employment tax;

• (b) of the number of hours worked by that employed person in that week; and

• (c) of the number of hours of work in a week normally involved for that person in consequence of the terms of any contract or by reason of any office held by him.

4

The Minister shall not be required to make any payment in respect of any employed person and any contribution week under subsection (2) of the said section 25 unless the employer produces such records of the payment of selective employment tax and of that employed person's employment outside the United Kingdom as the Minister may reasonably require.

Claims for payments under section 25

5

Any claim for a payment under subsection (1) or (2) of the said section 25 shall be made in such form and manner, contain such particulars, and be made within such period, as the Minister may direct; and any such payments shall be made at such times, in such manner, and subject to such conditions, if any, as the Minister may with the consent of the Treasury determine.

Determination of questions

6

The employer by whom a claim for a payment under subsection (1) or (2) of the said section 25 is made may require any question arising in connection with that claim, other than a question such as is mentioned in paragraph 7 or 8 of this Schedule, to be referred to and determined by a tribunal established under section 12 of the Industrial Training Act 1964.

7

If any question arises under subsection (2) of the said section 25—

• (a) as to whether a person was employed for any week outside both the United Kingdom and any area for the time being designated under section 1(7) of the Continental Shelf Act 1964 and, if so, by whom ; or

• (b) as to whether tax was not payable in respect of an employed person for any contribution week by reason of his being incapable of work as mentioned in that subsection or on unpaid leave,

the claimant may apply to the Minister for the determination of that question in accordance with Part IV of the National Insurance Act 1965, and for that purpose that question shall be treated as being a question such as is mentioned in section 64(1)(a) of that Act.

8

For the avoidance of doubt it is hereby declared that any question arising under Part IV of this Act, under the principal Act, or under Part VI of the Finance Act 1966, as to whether, or as to the person by whom, the tax in respect of any person and any contribution week is payable or has been paid shall be treated for the purpose of its determination as being a question such as is mentioned in section 64(1)(a) of the National Insurance Act 1965.

9

Section 97 of the National Insurance Act 1965 shall apply to any proceedings involving any question which arises as mentioned in paragraph 7 or 8 of this Schedule as it applies to the proceedings referred to in that section.

10

Paragraph 8 of this Schedule, so far as it relates to a question arising under Part VI of the Finance Act 1966, shall extend to Northern Ireland, but with the substitution for the reference to section 64(1)(a) of the National Insurance Act 1965 of a reference to section 63(1)(a) of the National Insurance Act (Northern Ireland) 1966 ; and section 93 of the last-mentioned Act shall apply to any proceedings involving any such question as it applies to the proceedings referred to in that section.

Enforcement

11

Any inspector for the purposes of the National Insurance Act 1965 may, subject to the production if requested of his certificate of appointment (whether furnished under section 90(6) of that Act or under section 49(6) of the National Insurance Act 1946), enter on any premises at or from which a person in relation to whom a claim for a payment under subsection (1) or (2) of section 25 of this Act has been made is or was employed, other than premises occupied as a private dwelling and not used by, or by permission of, the occupier for the purposes of a trade or business, and—

• (a) examine and make copies of or extracts from any such records as are mentioned in paragraph 3 or, as the case may be, paragraph 4 of this Schedule; and

• (b) require any person on those premises to furnish to the inspector such information as may be reasonably required by the Minister in connection with that claim ;

and section 8 of the principal Act (which relates to enforcement) shall have effect as if any reference in subsection (3) thereof to subsection (1) thereof included a reference to this paragraph.

Set-off of payments

12

Where any employer is entitled to the return of any amount paid by him by way of contributions under the National Insurance Act 1965 (including selective employment tax) otherwise than by way of contributions paid on behalf of an employed person, the Minister may, if he thinks fit, deduct from that amount the amount of any payment previously made to that employer under the principal Act or Part IV of this Act which would not have been made if those contributions had not been paid.

13

Any Minister by whom any payment falls to be made under any provision of the principal Act or of Part IV of this Act to an employer in respect of an employed person and a contribution week may deduct from the amount which would otherwise be payable any amount previously paid to that employer in respect of that person and that week by that or any other Minister under any other of those provisions.

14

Where a deduction from any payment to an employer is made under paragraph 12 or 13 of this Schedule in respect of a previous payment to that employer, the amount of that previous payment, or a part thereof equal to the amount of the deduction, shall not be otherwise recoverable from that employer.

SCHEDULE 13—

PART I — Capital Gains Tax and Corporation Tax

Losses of husband and wife

1

• (1) In section 20(5) of the Finance Act 1965 in the passage " any allowable loss accruing in that year of assessment " (which restricts the losses of either husband or wife which may be set off against gains accruing to the other to losses accruing in the current year) the words " accruing in that year of assessment " shall cease to have effect, so as to remove that restriction.

• (2) This paragraph shall have effect for the years 1965-66 and 1966-67 as well as later years of assessment, and, in relation to losses accruing in the year 1965-66, and in the year 1966-67, 31st December 1967 shall be substituted for 6th July (that is 6th July 1966 and 6th July 1967) in the proviso to the said section 20(5) (time for applying for exclusion of set off of losses under the said subsection (5)).

Replacement of business assets

2

• (1) Where section 33(1)(a) of the Finance Act 1965 applies to exclude a gain which, in consequence of Part II of Schedule 6 to that Act, is not all chargeable gain, the amount of the reduction to be made under paragraph (b) of the said section 33(1) (corresponding reduction in allowable expenditure in respect of new asset) shall be the amount of the chargeable gain, and not the whole amount of the gain ; and in subsection (2)(b) of the said section 33 (corresponding reduction in allowable expenditure in respect of the new asset where part only of the consideration in respect of the old asset has been applied as such expenditure) for the reference to the amount by which the gain is reduced under paragraph (a) of that subsection there shall be substituted a reference to the amount by which the chargeable gain is proportionately reduced under the said paragraph (a).

• (2) This paragraph shall be construed as one with the said section 33.

• (3) This paragraph shall have effect for all years of assessment and accounting periods beginning before or after the passing of this Act.

Compensation and insurance money

3

• (1) Where paragraph 13(3)(a) of Schedule 6 to the Finance Act 1965 applies to exclude a gain which, in consequence of Part II of that Schedule, is not all chargeable gain, the amount of the reduction to be made under paragraph (b) of the said paragraph 13(3) (corresponding reduction in allowable expenditure in respect of new asset) shall be the amount of the chargeable gain and not the whole amount of the gain; and in sub-paragraph (4)(b) of the said paragraph 13 (corresponding reduction in allowable expenditure in respect of the new asset where part only of the consideration in respect of the old asset has been applied as such expenditure) for the reference to the amount by which the gain is reduced under paragraph (a) of that sub-paragraph there shall be substituted a reference to the amount by which the chargeable gain is proportionately reduced under the said paragraph (a).

• (2) This paragraph shall have effect for all years of assessment and accounting periods beginning before or after the passing of this Act.

Premiums on conversion of securities

4

• (1) This paragraph applies where, on a conversion of securities, a person receives, or becomes entitled to receive, any sum of money which is by way of consideration (in addition to his new holding) for the disposal of the converted securities.

• (2) If the inspector is satisfied that the sum is small, as compared with the value of the converted securities, and so directs—

• (a) receipt of the sum shall not be treated for the purposes of Part III of the Finance Act 1965 as a disposal of part of the converted securities, and

• (b) the sum shall be deducted from any expenditure allowable under the said Part III as a deduction in computing a gain or loss on the disposal of the new holding by the person receiving or becoming entitled to receive the said sum,

and paragraph (a) above shall have effect notwithstanding paragraph 4(4) of Schedule 7 to the Finance Act 1965 as applied to conversions of securities by paragraph 5 of that Schedule.

• (3) A person who is dissatisfied with the refusal of the inspector to give a direction under this paragraph may appeal to the Commissioners having jurisdiction on an appeal against an assessment to tax in respect of a gain accruing to him on a disposal of the securities.

• (4) Paragraph 9 of Schedule 10 to the Finance Act 1966 (which deals with cases where no expenditure is attributable to the asset or that expenditure is small) shall apply as if this paragraph were mentioned in the said paragraph 9(1).

• (5) In this paragraph " conversion of securities " and " security " shall be construed in accordance with paragraph 5(3) of Schedule 7 to the Finance Act 1965.

• (6) This paragraph has effect as respects sums becoming payable on or after 6th April 1967.

Shares in close company transferring assets at an undervalue

5

• (1) Paragraph 18 of Schedule 7 to the Finance Act 1965 shall not apply where the transfer of the asset is a disposal to which paragraph 2(1) of Schedule 13 to that Act (transfers within a group of companies) applies.

• (2) This paragraph shall have effect for all years of assessment and accounting periods beginning before or after the passing of this Act

Part disposals

6

It is hereby declared that paragraph 7 of Schedule 6 to the Finance Act 1965, and all other provisions for apportioning on a part disposal expenditure which is deductible in computing a gain, are to be operated before the operation of, and without regard to—

• (a) paragraph 20(1) of Schedule 7 to the Finance Act 1965 (husband and wife),

• (b) paragraph 2(1) of Schedule 13 to that Act (transfers within group of companies),

• (c) section 33 of that Act (replacement of business assets), but without prejudice to the provisions of subsection (11) of that section,

• (d) any other enactment making an adjustment to secure that neither a gain nor a loss occurs on a disposal.

Revival of transitory provisions in s.82 of Finance Act 1965

7

The repeal of section 82 of the Finance Act 1965 effected as respects gains and losses accruing on or after 6th April 1966 by section 53(7) of, and Part VI of Schedule 13 to, the Finance Act 1966 shall be deemed never to have extended to subsection (2) or subsection (3) of the said section 82 (exclusion of companies and local authorities from Case VII of Schedule D, and transitional application for corporation tax purposes of Case VII provisions for computing gains and losses).

Exclusion of premiums taxed under Case VIII of Schedule D

8

It is hereby declared that in paragraph 5(1) of Schedule 8 to the Finance Act 1965 (under which the taxed amount of any premium for a lease is to be excluded in the computation under paragraph 7 of Schedule 6 to that Act) the reference to that computation is a reference to the entire computation of the gain or loss, and accordingly the taxed amount is to be excluded from the consideration for the disposal, in addition to being excluded from the numerator of the fraction to be employed in apportioning deductible expenditure.

Expenditure by tenant under terms of lease

9

• (1) Paragraph 7 of Schedule 8 to the Finance Act 1965 (landlord's expenditure deductible in computing his gain on disposal of lease to include tenant's expenditure) shall apply on the disposal by way of grant of the lease and on any subsequent disposal of the asset out of which the lease is granted, and accordingly in that paragraph the words " on a disposal of the lease " shall cease to have effect.

• (2) This paragraph shall have effect as respects all years of assessment and accounting periods ending before or after the passing of this Act.

Chargeable gains accruing to non-resident companies

10

• (1) If any tax payable by any person by virtue of section 41(2) of the Finance Act 1965 (under which shareholders in a non-resident company may be taxed in respect of a chargeable gain accruing to the company) is paid by the company to which the chargeable gain accrues, or in a case under subsection (9) of the said section 41 (chargeable gain traced through a non-resident company holding shares in which a chargeable gain accrues) is paid by any such other company, the amount so paid shall not for the purposes of income tax, capital gains tax or corporation tax be regarded as a payment to the person by whom the tax was originally payable.

• (2) This paragraph shall have effect as from 6th April 1965.

PART II — Short-Term and Long-Term Gains

Foreign bank accounts: short- and long-term gains

11

• (1) Paragraph 11(1) of Schedule 7 to the Finance Act 1965 and paragraph 15(1) of Schedule 9 to the Finance Act 1962 (exemption for debt in hands of original creditor) shall not apply to a debt owed by a bank which is not in sterling and which is represented by a sum standing to the credit of a person in an account in the bank.

• (2) This paragraph shall apply to any disposal on or after 6th April 1967.

Exchange of shares and securities under nationalisation Acts : short-term gains

12

For the purposes of paragraph 11 of Schedule 9 to the Finance Act 1962 (conversion of securities not to involve any disposal of the old holding or any acquisition of the new holding) ' conversion of securities' shall include any exchange of securities effected in pursuance of the Iron and Steel Act 1967 or any other enactment (including an enactment passed after this Act) which provides for the compulsory acquisition of any shares or securities and the issue of securities or other securities instead.

SCHEDULE 14

Definition of current use value

1

• (1) For the purposes of the principal section and this Schedule, the current use value of land shall be ascertained in accordance with this paragraph, and in this paragraph the time as at which current use value is to be ascertained is referred to as " the relevant time ".

• (2) It shall be assumed that planning permission—

• (a) would be granted for any development of the land which does not constitute material development, but

• (b) would not be granted for any development of the land which constitutes material development.

• (3) No account shall be taken of any planning permission in force at the relevant time, in so far as it would authorise the carrying out of any project of material development of the land to be begun after that time (but account shall be taken of any planning permission in force at the relevant time in so far as it would authorise the carrying out of any project of material development of the land begun but not completed at the relevant time).

• (4) The following provisions in or made under Schedule 6 to the Land Commission Act 1967 shall apply, subject to any necessary modifications, for the purposes of this paragraph—

• (a) sub-paragraphs (1) and (2) of paragraph 4 (general principle of valuation, and disregard of charges on land),

• (b) sub-paragraphs (3), (4) and (5) of paragraph 7 (minor provisions relating to planning permission, and exclusion of depreciation of other land),

• (c) any regulations in force at the relevant time under paragraph 11 (extension of categories of material development),

but in ascertaining the current use value of land disposed of to an authority possessing compulsory purchase powers sub-paragraphs (1), (2) and (4) of paragraph 4 of Schedule 9 to the Land Commission Act 1967 shall apply with any necessary modifications.

• (5) The provisions of the Land Commission Act 1967 applied by this paragraph shall have effect for the purposes of this paragraph notwithstanding that at the relevant time they had not come into force for the purposes of that Act, and the Betterment Levy (Planning Assumptions) Regulations 1967 and the Betterment Levy (Planning Assumptions) (Scotland) Regulations 1967 made under paragraph 11 of Schedule 6 to the Land Commission Act 1967 shall have effect for those purposes as if they had come into force on 6th April 1965.

Adjustment for current use value reflecting new development

2

• (1) Where on or after 6th April 1967 a project of material development is begun and in accordance with paragraph 1(3) above account is to be taken of the relevant planning permission so as to increase the current use value of any land, then in computing a gain accruing on any subsequent disposal by the owner of the land—

• (a) the owner of the land shall be deemed at the time when the project of material development was begun to have incurred expenditure in respect of that land of an amount equal to that increase in current use value, being expenditure allowable as a deduction under paragraph 4(1)(b) of Schedule 6 to the Finance Act 1965, and

• (b) the proviso to subsection (1) of the principal section shall not have effect.

• (2) If the planning permission so taken into account affects part only of the land, the expenditure shall be deemed to have been incurred exclusively in respect of that part.

Restrictions on deductions allowable in computing gains

3

• (1) In applying paragraph 4(1)(b) of Schedule 6 to the Finance Act 1965 to any expenditure in computing a gain accruing on a disposal to which subsection (1) of the principal section applies the current use value of the land at the time of the disposal shall be compared with what that current use value would have been if the expenditure had not been incurred and—

• (a) if the current use value of the land would not have been less if the expenditure had not been incurred, the whole of that expenditure shall be excluded, and

• (b) if it would have been less, but the amount of the expenditure exceeds the difference, the excess shall not be allowable as a deduction in making the computation.

• (2) If on or after 6th April 1967 there has been an increase in the current use value of any land as described in paragraph 2(1) of this Schedule sub-paragraph (1) above shall apply as respects expenditure incurred before that increase by reference to the current use value of the land at a time immediately before the increase, and by reference to what the current use value of the land would have been at that time if the expenditure had not been incurred.

Expenses of valuation

4

In paragraph 4(2)(b) of Schedule 6 to the Finance Act 1965 (expenses of ascertaining market value) the reference to market value shall include a reference to current use value, but any costs falling to be allowed under paragraph 19 of Schedule 6 to the Land Commission Act 1967 shall not also be allowed under the said paragraph 4.

Part disposals

5

• (1) In applying paragraph 7(2)(b) of Schedule 6 to the Finance Act 1965 (apportionment of expenditure by reference to market value of what is undisposed of) to the computation of a gain accruing on a disposal to which subsection (1) of the principal section applies current use value shall be substituted for market value in that paragraph.

• (2) Where subsection (1) of the principal section applies to a part disposal—

• (a) if what is acquired from the person making the disposal is land as defined in this Schedule, the reference in subsection (1)(b) of the principal section to the current use value of the land is a reference to the current use value of the land which is so acquired,

• (b) if nothing is so acquired or if what is so acquired is not land as defined in this Schedule, subsection (1)(b) of the principal section shall not apply, and subject to the following provisions of this Schedule, no adjustment shall be made to the amount of the consideration for the part disposal.

• (3) Where subsection (1) of the principal section applies to a part disposal of any land, then in computing a gain accruing on any subsequent disposal by the owner of the land of the remainder of that land, the proviso to subsection (1) of the principal section shall not have effect.

• (4) The amount of the consideration for a part disposal which is or derives from a chargeable act or event within section 33, section 34 or subsection (3) or (5) of section 35 of the Land Commission Act 1967 (Cases D, E and part of Case F) shall be the amount, if any, by which the current use value (called V(1)) of the land out of which the part disposal is made at a time immediately before the part disposal exceeds the current use value (called V(2)) of that land after the part disposal, and accordingly the apportionment under paragraph 7 of Schedule 6 to the Finance Act 1965 shall be made by attributing the fraction $V(1)−V(2)V(1)$ of the apportionable expenditure to what is disposed of.

• (5) In ascertaining in accordance with paragraph 13(1)(c) of Schedule 6 to the Finance Act 1965 (compensation and insurance money) whether the amount of a capital sum derived from land, on a disposal to which subsection (1) of the principal section would apply, is small as compared with the value of the land, its value shall be its current use value.

• (6) Where under paragraph 4 of Schedule 10 to the Finance Act 1966 (part disposal on compulsory acquisition) a transfer is not to be treated as a disposal and, but for that, subsection (1) of the principal section would have applied to the disposal, for references in that paragraph to the amount of the consideration for the transfer, or to the market value of the land transferred, there shall be substituted references to the current use value of the land transferred, and for the reference in that paragraph to the market value of the holding before the transfer there shall be substituted a reference to its current use value at that time.

• (7) Notwithstanding section 45(5) of the Finance Act 1965 (compensation and insurance money: disposal to be treated as made when the money is received), the time when a disposal to which this paragraph applies is made shall for the purposes of—

• (a) comparing under sub-paragraph (4) above current use value before and after a part disposal,

• (b) ascertaining whether, for the purposes of subsection (1) of the principal section or this Schedule a part disposal falls before 6th April 1967, or later, and

• (c) ascertaining whether the proviso to subsection (1) of the principal section applies,

be the time when the value of the land is first affected by the event giving rise to, or constituting, the disposal.

Leases

6

• (1) Without prejudice to paragraph 2(2) of Schedule 8 to the Finance Act 1965, or any other provision in Part III of that Act, the current use value of a lease (or of any land subject to a lease) is to be ascertained without regard to any premium due under the lease or any sublease, but with regard to all other rights under the lease (and, for the current use value of a lease subject to a sublease, under that sublease); and where under the preceding provisions a lease would have a negative value, the current use value of the lease shall be zero.

• (2) If a lease is granted out of any land after 5th April 1967 then in computing any gain accruing to the person granting the lease on any disposal of the land at a time after the grant of the lease, but while it subsists, the current use value of the land shall not exceed what its current use value would have been immediately after the grant of the lease if it had not been subject to the lease:

Provided that if any of the enactments mentioned in paragraph 8 of this Schedule (enactments making an adjustment to secure that neither a gain or loss accrues) is applicable by way of adjustment of the gain computed in accordance with this sub-paragraph, this sub-paragraph shall also apply to any disposal of the land by the transferee effected while the lease subsists, and so on if any of those enactments is so applicable on the disposal by that transferee.

• (3) Where there is a part disposal of a lease which is a wasting asset by way of the grant of a sublease then for the purpose of apportioning the expenditure attributable to the lease under paragraph 4(1)(a) and 4(1)(b) of Schedule 6 to the Finance Act 1965 the current use value of the sublease (called V (A)) shall be compared with what its current use value (called V(B)) would be if the rent payable under the sublease were the same as the rent payable under the lease, and out of each item of the expenditure there shall be apportioned to what is disposed of—

• (a) if V(A) is not less than V(B), the fraction which, under paragraph 1(3) of Schedule 8 to the Finance Act 1965 is to be written off over the period which is the duration of the sublease, and

• (b) if V (A) is less than V (B), the said fraction multiplied by $V(A)V(B)$

and if the sublease is a sublease of part only of the land comprised in the lease this sub-paragraph shall apply only in relation to a proportion of the said expenditure which is the same as the proportion which the current use value of the land comprised in the sublease bears to the current use value of that and the other land comprised in the lease; and the remainder of that expenditure shall be apportioned to what remains undisposed of.

This sub-paragraph has effect instead of paragraph 7 of Schedule 6 to the Finance Act 1965, and instead of paragraph 4 of Schedule 8 to that Act.

Substitution of current use value for market value

7

• (1) Subsection (1) of the principal section shall apply notwithstanding the provisions of section 22(4) or section 24(1) of the Finance Act 1965 or of any other enactment under which a person is to be treated as acquiring or disposing of land for a consideration equal to its market value (but not so as to prevent the other party to any transaction being treated as disposing of or acquiring land for a consideration equal to its market value unless subsection (1) of the principal section also applies to the disposal by that other party).

• (2) Subsection (1) of the principal section shall not affect the value to be placed on land as constituting the consideration for the disposal of some other asset, and this sub-paragraph applies in particular—

• (a) where an asset is disposed of, and the consideration consists of or includes land, but without prejudice to the application of the principal section to the gain accruing on that disposal of the land, or its disposal by the person acquiring it,

• (b) where a shareholder acquires land by way of a capital distribution constituting a disposal or part disposal of his shares, but without prejudice to the application of the principal section to the disposal of the land by the company, and to the shareholder's disposal of the land,

• (c) where, under paragraph 13(2) of Schedule 7 to the Finance Act 1965, a purchaser of an interest in settled property is treated as disposing of his interest and the consideration consists wholly or partly of land forming part of the settled property, but without prejudice to the application of the principal section to the disposal of the land by the trustee, and to any subsequent disposal of the land by the purchaser of the interest.

• (3) Without prejudice to sub-paragraph (2) above, subsection (1) of the principal section shall not affect the value to be placed on land acquired in satisfaction of a debt as constituting the consideration for disposal of the debt, nor the limitation on that value by reference to market value in paragraph 11(3) of Schedule 7 to the Finance Act 1965, but without prejudice to the application of the principal section to the gain accruing on the disposal of the land by the debtor, and to any subsequent disposal of the land by the creditor ; and where the principal section applies to a subsequent disposal by the creditor (and he is the original creditor) the gain accruing on the disposal shall not be reduced under the said paragraph 11(3).

• (4) In paragraphs (d) and (e) of paragraph 2(1) of Schedule 10 to the Finance Act 1965 (jurisdiction in questions of market value and disclosure of information about market value) references to market value shall, in relation to land, include references to current use value ; and any regulations made under the said paragraph (d) or (e) before the passing of this Act shall, except where the context otherwise requires, be construed accordingly.

Carry forward of gain or loss

8

The provisions of the principal section shall have effect subject to, and be operated before the operation of—

• (a) paragraph 20(1) of Schedule 7 to the Finance Act 1965 (husband and wife),

• (b) paragraph 2(1) of Schedule 13 to that Act (transfers within group of companies), and

• (c) without prejudice to the provisions of this Schedule relating to section 33 of the Finance Act 1965, any other enactment making an adjustment to secure that neither a gain nor a loss accrues on a disposal.

Replacement of business assets

9

• (1) Sub-paragraphs (2), (3) and (4) below shall apply in determining under subsection (1) or subsection (2) of section 33 of the Finance Act 1965 whether all or part of the consideration for a disposal is applied in acquiring other assets.

• (2) The principal section shall not apply and, accordingly, the amount of the consideration for the disposal of land shall not be restricted by virtue of that section to the current use value of the land.

• (3) Any part of the consideration which is applied in meeting betterment levy payable on the disposal shall be left out of account.

• (4) If part of the consideration is applied as described in subsection (1) of the said section 33 in acquiring land any further part of the consideration which is applied in meeting betterment levy payable in respect of material development of that land shall be treated as having been applied in acquiring that land.

• (5) Without prejudice to subsection (11) of the said section 33, the provisions of the principal section and this Schedule shall be applied in fixing the amount of the consideration for the disposal of, or of the interest in, the old assets, or for acquiring, or acquiring the interest in, the new assets, and in fixing the amount of the gain accruing on the disposal, before section 33 is applied, and accordingly the adjustments to be made under paragraphs (a) and (b) of subsection (1), and paragraphs (a) and (b) of subsection (2), of the said section 33 are adjustments of the amount of consideration or gain as computed, where relevant, in accordance with the principal section and this Schedule.

Transfer of business on retirement

10

• (1) Section 34(3)(b) of the Finance Act 1965 (relief by reference to value of chargeable business assets of a family company transferred on retirement), and paragraph 2(2) of Schedule 10 to the Finance Act 1966 (restriction of relief on dissolution of family company where chargeable business assets are distributed to shareholders) shall have effect subject to the provisions of this paragraph.

• (2) For the purposes of the said enactments, as they apply on the disposal of land or of any other assets, the value of any chargeable business assets consisting of land shall be the current use value of that land.

Transfer of business to a company

11

Where by virtue of paragraph 8(2) of Schedule 7 to the Finance Act 1965 a gain accruing on a disposal of land is not a chargeable gain and, but for that, subsection (1) of the principal section would apply to the disposal, the transferor shall be treated, notwithstanding anything in the said paragraph 8(2), as if the shares acquired by the transferor and representing consideration for the land transferred were acquired by him for a consideration equal to the market value of the land at the time of the transfer reduced by the amount of the chargeable gain which, but for the said paragraph 8(2), would have accrued to him on the disposal (or as the case may be increased by the amount of the allowable loss which would have so accrued), and except as provided by the preceding provisions of this paragraph, the principal section and this Schedule shall not apply to any disposal of the shares.

Appropriations to and from stock-in-trade

12

• (1) The principal section shall not be taken as affecting the reference to market value in paragraph 1(1) of Schedule 7 to the Finance Act 1965 (under which a person who appropriates an asset as trading stock is to be treated as selling it for its market value).

• (2) A person to be treated under sub-paragraph (2) of the said paragraph 1 as having acquired any land (at the time when it is appropriated out of trading stock or is retained on his ceasing to carry on the trade) shall be treated as having acquired it for a consideration equal to its current use value at that time.

Capital allowances and renewals allowances

13

• (1) Where any capital allowance or renewals allowance, as defined in paragraph 6 of Schedule 6 to the Finance Act 1965, is claimed or claimable in respect of expenditure on land to which this Schedule applies, and part of that expenditure is, under paragraph 3 of this Schedule, excluded from the sums allowable as a deduction in the computation under the said Schedule 6, it shall be assumed for the purposes of that Schedule that the capital allowance or renewals allowance is to be made, or made primarily, in respect of the part of that expenditure which is not so excluded.

• (2) Paragraph 28 of the said Schedule 6 shall apply where, under this Schedule, it is to be assumed that any land was on 6th April 1965 sold by the owner as it applies where that assumption is to be made under Part II of that Schedule.

Tax on chargeable gains and estate duty

14

Section 42(3) of the Finance Act 1966 (relief by reference to estate duty in respect of a gift inter vivos) shall not apply to a gift inter vivos consisting of land unless the current use value of the land at the time of the death exceeds the sums within paragraphs (a) and (b) of paragraph 4(1) of Schedule 6 to the Finance Act 1965 which, if the donee had disposed of the asset at the time of the death, would have been allowable in computing the gain accruing on that disposal and, if the said section 42(3) does so apply, that excess shall be the excess referred to in the expression " the said excess " in the provisions of the said section 42(3) which determine the proportion of estate duty by reference to which relief is to be given.

Transitory provision for short-term gains subject to capital gains tax or corporation tax

15

The principal section, without subsections (5) and (6), and with paragraphs 1 and 2 of this Schedule shall, notwithstanding that it is to be construed as one with Part III of the Finance Act 1965, apply with any necessary modifications where by virtue of section 17(15) or section 82(3) of the Finance Act 1965 any gain (or loss) accruing on the disposal is to be determined in accordance with the provisions applicable to income tax chargeable under Case VII of Schedule D (and not in accordance with the provisions of the said Part III).

Uniform application of current use values

16

• (1) In the computation of a gain accruing on a disposal to which subsection (1) of the principal section applies, it shall be assumed, where relevant, that that subsection and this Schedule also had effect in relation to any prior disposal or other transaction, notwithstanding that the prior disposal or other transaction fell before 6th April 1967 (but on or after 6th April 1965), or that subsection (1) of the principal section was then displaced by an election.

• (2) This paragraph applies in particular as respects a prior part disposal or a prior disposal to which any of the enactments mentioned in paragraph 8 of this Schedule applied.

• (3) This paragraph also applies notwithstanding that by virtue of paragraph 3(1) of Schedule 6 to the Finance Act 1965 (exclusion of short-term gains) the gain accruing on any prior disposal was not a chargeable gain, and sub-paragraph (7) of the said paragraph 3 (under which an apportionment of consideration or expenditure made for the purposes of a short-term gain is to be followed on a later disposal) shall not apply in relation to a gain accruing on a disposal to which subsection (1) of the principal section applies.

Interpretation

17

In the principal section and this Schedule, unless the context otherwise requires—

• " land " means a freehold interest in land or any lease of land,

• " material development ", " planning permission " and " project of material development " have the same meanings as in the Land Commission Act 1967,

and in Scotland " freehold interest " shall be construed in accordance with section 100(2)(d) of the Land Commission Act 1967.

SCHEDULE 15

Allowance for levy under Cases VUL and VI of Schedule D

1

• (1) For the purposes of section 22(1) of the Finance Act 1963 (taxation of premium on grant of lease) the amount of any premium payable to the landlord shall be reduced by the amount of any betterment levy charged on the premium, and that reduction shall be made before the reduction under the said section 22(1) depending on the length of the lease.

• (2) In applying subsection (6) of the said section 22 (premiums payable by instalments: claim for treatment as rent) to a premium which falls to be reduced under sub-paragraph (1) above (looking at the fraction by which it is reduced before any reduction depending on the length of the lease) a reduction by that fraction shall be made in the amount of each instalment.

• (3) Where a reduction is made under sub-paragraph (2) above, the provisions of section 29(6)(b) of the Finance Act 1963 (which prevent instalments taxed under the said section 22(6) from being treated as trading receipts) shall apply only to the part of each of the instalments which is so taxed.

• (4) For the purposes of sub-paragraph (1) above the amount of betterment levy charged on a premium is the principal amount of the betterment levy under Case B charged in respect of the grant of the lease reduced by applying the fraction $AB$ (if less than unity) where—

• " A " is the capital value of the premium payable to the landlord as brought into account under paragraph 7 of Schedule 4 to the Land Commission Act 1967, and

• " B " is the aggregate amount of consideration as computed for the purposes of charging betterment levy.

• (5) Sub-paragraphs (1) and (4) above shall also apply as respects any amounts brought into subsection (1) of section 22 of the Finance Act 1963 as a premium by subsection (2) of that section (landlord's benefit from tenant's obligation to carry out work on premises) so far as that benefit is brought into account under the said paragraph 7 of Schedule 4 to the Land Commission Act 1967 ; and references to premiums in this paragraph shall be construed accordingly.

• (6) For the purposes of sub-paragraph (1) above the amount of betterment levy charged on any sum brought into subsection (1) of the said section 22 as a premium by subsection (4) of that section (consideration for the variation or waiver of the terms of a lease) is the principal amount of the betterment levy under Case E or Case F charged in respect of the disposition for which that sum is consideration, but subject to a proportionate reduction as under sub-paragraph (4) above where the sum forms part only of the consideration brought into account in assessing the betterment levy in respect of the disposition and, where the levy is under Case F, subject to such adjustments of the consideration so brought into account as may be appropriate; and references to a premium in this paragraph shall be construed accordingly.

• (7) Any taxable amount under section 23 or section 24 of the Finance Act 1963 (assignment of lease at undervalue and sale with right to reconveyance) shall be reduced by so much of the principal amount of any betterment levy under Case A charged on the assignment or sale on which the charge to tax arises as is attributable to the said taxable amount, and that reduction shall be made before any reduction under the said section 23 depending on the length of the lease, or any reduction under the said section 24 depending on the time between the sale and a subsequent reconveyance.

• (8) Any reduction to be effected under any of the preceding provisions of this paragraph shall be disregarded in arriving at—

• (a) " the amount chargeable on the superior interest " in paragraphs 8, 9 and 10 of Schedule 4 to the Finance Act 1963 (allowance to person paying premium in respect of amount chargeable on the premium), and

• (b) " the amount chargeable " in Schedule 9 to that Act (allowance of trading deduction where premium paid).

• (9) Where for the purposes of Part III of the Land Commission Act 1967 a notice of assessment of betterment levy results in an operative assessment of levy it shall become final and conclusive for the purposes of this paragraph, but subject to any adjustment under section 54 or section 55 of that Act (mistake of fact and further notice of assessment of levy), or under any other provision of that Act.

• (10) Where betterment levy is chargeable in respect of land part only of which is the relevant land for the purposes of the charge to tax under Case VIII or Case VI of Schedule D, or where part of the consideration for a disposition is payable to a person other than the grantor in the circumstances mentioned in section 36(3) of the Land Commission Act 1967, the levy shall be apportioned in such manner as may be appropriate in the circumstances.

• (11) Any question arising in any appeal against an assessment to tax as to the application of the preceding provisions of this paragraph shall be determined on a reference to the Lands Tribunal.

• (12) The Land Commission shall afford to the inspector and to the Lands Tribunal such information as they may require for the purpose of this paragraph.

• (13) In relation to land in Scotland for any reference in this paragraph to the Lands Tribunal there shall be substituted a reference to the Lands Tribunal for Scotland:

Provided that until sections 1 to 3 of the Lands Tribunal Act 1949 come into force as regards Scotland, this subsection shall have effect as if for the reference to the Lands Tribunal for Scotland there were substituted a reference to a person selected from the panel of referees appointed under Part I of the Finance (1909-1910) Act 1910.

• (14) This paragraph shall apply in relation to any chargeable act or event before, as well as after, the passing of this Act.

Relief in respect of levy from estate duty on gifts inter vivos, etc.

2

• (1) If property comprised in a gift inter vivos, and not settled by the gift, is deemed for the purposes of estate duty to pass on a death, and by reason of a chargeable act or event at a time before the death betterment levy is chargeable—

• (a) on the donee or his personal representative in respect of a chargeable interest which is at that time comprised in the gift, and which has not been settled by the donee, or

• (b) if the principal value of the property for the purpose of estate duty on the death is to be ascertained at a time before the death, on a successor to the donee in respect of a chargeable interest which at that time was comprised in the gift, and which was not settled by the donee,

the principal value of the property for the purposes of estate duty on the death shall be reduced by the principal amount of the betterment levy, and that reduction shall be made before any reduction of that value under section 64 of the Finance Act 1960 (graduation of charge by reference to period between gift and death).

• (2) If any property ceasing to be settled property by virtue of subsection (8) proviso or subsection (12) proviso of section 38 of the Finance Act 1957 is to be treated as comprised in a gift inter vivos deemed for purposes of estate duty to pass on a death, or as the case may be as comprised in property in which an interest within section 43 of the Finance Act 1940 subsisted and, by reason of a chargeable act or event after it ceases to be settled property but before the death, betterment levy is chargeable on the person taking the settled property or his successor in respect of a chargeable interest which was comprised in that property when it ceased to be settled property, the principal value of the property for the purposes of estate duty on the death shall be reduced by the principal amount of the betterment levy, and that reduction shall be made before any reduction of that value under section 64 of the Finance Act 1960.

• (3) Where for the purposes of Part III of the Land Commission Act 1967 a notice of assessment of betterment levy results in an operative assessment of levy it shall become final and conclusive for the purposes of this paragraph, but subject to any adjustment under section 54 or section 55 of that Act (mistake of fact and further notice of assessment of levy), or under any other provision of that Act.

• (4) The Board may require the Land Commission to issue a certificate giving particulars of the relevant act or event and of the amount of the levy; and in any proceedings relating to relief under this paragraph the certificate shall be sufficient evidence of the facts which it states.

Where the Land Commission have been required to give a certificate under this sub-paragraph it shall be their duty to inform the Board of any adjustment of the levy falling to be made under the Land Commission Act 1967.

• (5) Where betterment levy is chargeable in respect of land part only of which is the land comprised in the gift, or where two or more persons are jointly or severally liable to pay the levy, the levy shall be apportioned by the Board in such manner as may be appropriate in the circumstances and section 60(3) of the Finance (1909-10) Act 1910 (right of appeal) shall apply to any question of apportionment under this sub-paragraph as it applies to a question of the value of any land.

The Land Commission shall afford to the Board all such information as they may require for the purpose of arriving at an apportionment under this sub-paragraph.

• (6) In this paragraph

• " chargeable interest " has the meaning given by paragraph 2(1) of Schedule 5 to the Land Commission Act 1967 ;

• " successor ", in relation to any person, means his successor in title, not being a person who derives title under a disposition for valuable consideration.

• (7) This paragraph shall apply in relation to any chargeable act or event before, as well as after, the passing of this Act.

• (8) This paragraph shall be construed as one with the Finance Act 1894.

SCHEDULE 16

Part I — Repeals in Connection with Abolition of Retailer’s Licences and Club Licences

Part II — Repeals in Connection with Abolition of Certain Permits

Part III — Other Customs and Excise Repeals

Part IV — Purchase Tax repeal

PART V — Repeals as to Probate

Part VI — Subvention Payment Repeals

Part VII — Stamp Duty Repeals

Part VIII — Mineral Rights Duty Repeals

PART IX — Provisional Collection of Taxes

Part X — Other Repeals

Pool betting duty.

8

11

Parts II—IV

13

25

33

39

The above repeals shall not have effect, in the case of the repeal of section 4(6) of the Finance Act 1959, until 1st May 1968 or, in any other case, until 1st October 1967.

SCHEDULES 8—

SCHEDULES 14, 15—

Part V. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1

The above repeals shall not affect liability to, or the assessment, collection or recovery of, mineral rights duty for the financial year ending on 31st March 1967, or for any previous financial year, or any other right, liability or proceedings in respect of or concerning that duty for any such year.

2

In Scotland, the above repeals, so far as they relate to subsections (2) to (5) of section 33, and section 34, of the Finance (1909-10) Act 1910, to so much of section 42 of that Act as has effect for the purposes of those provisions, and to section 7 of the Revenue Act 1911, shall not have effect until the coming into force in that country of sections 1 to 4 of the Lands tribunal Act 1949.

Part IX. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Editorial notes