Finance Act 1972

• (6) Where in accordance with section 85 above any advance corporation tax falls to be set against the company's liability to corporation tax on its income for the relevant accounting period—

• (a) the company may for the purposes of this section allocate that advance corporation tax in such amounts and to the corporation tax attributable to such of its income for that period as it thinks fit; and

• (b) the amount of corporation tax attributable to the relevant income as determined in accordance with subsections (4) and (5) above shall be reduced by so much (if any) of that advance corporation tax as is allocated to the corporation tax attributable to that income;

but the amount of advance corporation tax allocated under this subsection to the corporation tax attributable to any income shall not exceed the advance corporation tax that would have been payable (apart from section 89 above) in respect of a distribution made at the end of the relevant accounting period of an amount which, together with the advance corporation tax so payable in respect of it, is equal to that income.

• (7) The foregoing provisions of this section shall have effect from 1st April 1973.

• (8) No order shall be made under section 31 or 32 of the Finance Act 1966 (transitory provisions for dividends, interest and royalties paid to non-residents) extending the period mentioned in either of those sections beyond 5th April 1973.

Miscellaneous provisions

Change in ownership of company: calculation and treatment of advance corporation tax

101

• (1) This section applies if—

• (a) within any period of three years there is both a change in the ownership of a company and (either earlier or later in that period, or at the same time) a major change in the nature or conduct of a trade or business carried on by the company; or

• (b) at any time after the scale of the activities in a trade or business carried on by a company has become small or negligible, and before any considerable revival of the trade or business, there is a change in the ownership of the company.

• (2) Sections 85 and 89 above and Schedule 14 below shall apply to an accounting period in which the change of ownership occurs as if the part ending with the change of ownership, and the part after, were two separate accounting periods; and for that purpose the income of the company charged to corporation tax for the accounting period (as defined in subsection (6) of the said section 85) shall be apportioned between those parts.

• (3) No advance corporation tax paid by the company in respect of distributions made in an accounting period beginning before the change of ownership shall be treated under subsection (4) of the said section 85 as paid by it in respect of distributions made in an accounting period ending after the change of ownership; and this subsection shall apply to an accounting period in which the change of ownership occurs as if the part ending with the change of ownership, and the part after, were two separate accounting periods.

• (4) In subsection (1) above "major change in the nature or conduct of a trade or business " includes—

• (a) a major change in the type of property dealt in, or services or facilities provided, in the trade or business; or

• (b) a major change in customers, outlets or markets of the trade or business; or

• (c) a change whereby the company ceases to be a trading company and becomes an investment company or vice versa;

• (d) where the company is an investment company, a major change in the nature of the investments held by the company;

and this section applies even if the change is the result of a gradual process which began outside the period of three years mentioned in subsection (1)(a) above.

• (5) In this section—

• " trading company " means a company whose business consists wholly or mainly of the carrying on of a trade or trades;

• " investment company " means a company (other than a holding company) whose business consists wholly or mainly in the making of investments and the principal part of whose income is derived therefrom ;

• " holding company " means a company whose business consists wholly or mainly in the holding of shares or securities of companies which are its 90 per cent. subsidiaries and which are trading companies.

• (6) Subsection (3) above applies to advance corporation tax which a company is treated as having paid by virtue of section 92 above as it applies to advance corporation tax which it has actually paid.

• (7) Subsections (6) and (7) of section 483 of the Taxes Act (which contain supplementary provisions relating to the restriction of the carry-forward of losses under that section in circumstances corresponding to those dealt with in this section) and section 484 of that Act (which contains rules for ascertaining changes of ownership for the purposes of that section) shall apply also for the purposes of this section and as if in subsection (3) of section 484 the reference to the benefit of the losses were a reference to the benefit of the advance corporation tax.

Rectification of excessive set-off etc. of advance corporation tax or tax credit

102

• (1) If an inspector discovers that—

• (a) any set-off of advance corporation tax under section 85 above; or

• (b) any set-off or payment of tax credit,

ought not to have been made, or is or has become excessive, the inspector may make any such assessments as may in his judgment be required for recovering any tax that ought to have been paid or any payment of tax credit that ought not to have been made and generally for securing that the resulting liabilities to tax (including interest on unpaid tax) of the persons concerned are what they would have been if only such set-offs or payments had been made as ought to have been made.

• (2) The Management Act shall apply to any assessment under this section for recovering a payment of tax credit as if it were an assessment to income tax for the year of assessment, or, in the case of a company, corporation tax for the accounting period, in respect of which the payment was claimed, and as if that payment represented a loss of tax to the Crown; and any sum charged by any such assessment shall, subject to any appeal against the assessment, be due within fourteen days after the issue of the notice of assessment.

Charge of advance corporation tax at previous rate until new rate is fixed and changes of rate

103

• (1) Notwithstanding that a rate of advance corporation tax has not been fixed for any financial year, advance corporation tax in respect of distributions made in that year shall be payable under Schedule 14 to this Act and may be assessed under that Schedule according to the rate last fixed but, if a rate of advance corporation tax for that year is not fixed by an Act passed on or before 5th August next after the end of the year, or advance corporation tax is charged for that year otherwise than as it has been paid or assessed, the necessary adjustment shall be made by discharge or repayment of tax or by a further assessment.

• (2) Where the House of Commons passes a Resolution for fixing the rate of advance corporation tax for any financial year or for altering the charge to advance corporation tax for any financial year, then any payment or assessment afterwards made by virtue of subsection (1) above may be made in accordance with the Resolution; but that subsection shall not require any payment to be made or authorise the making of any assessment later than 5th May next after the end of any financial year unless a Resolution for fixing a rate of advance corporation tax for that year has been so passed, nor shall any such payment be required or assessment made by virtue of any such Resolution later than the prescribed period from the date on which the Resolution is passed.

• (3) In subsection (2) above " the prescribed period " has the meaning given in section 243(7) of the Taxes Act.

• (4) Where different rates of advance corporation tax are in force in different parts of an accounting period, the maximum set-off permitted for that accounting period under subsection (2) of section 85 above shall be determined by apportioning the income of the company charged to corporation tax for that period (as defined in subsection (6) of that section) between the different parts of the period, calculating the maximum for each part as if it were a separate accounting period and aggregating the result.

• (5) Where a company makes a distribution before 6th April in any financial year and the rate of advance corporation tax for that year differs from the rate last fixed—

• (a) any advance corporation tax payable in respect of the distribution shall be calculated according to the rate last fixed and sections 84(3) and 86(2) above and Schedule 14 below shall have effect in relation to the distribution as if the rate for that year were the same as the rate last fixed ;

• (b) if the distribution is made in an accounting period which extends beyond 5th April in that year and another distribution is made, or franked investment income is received, in that period after that date, the company's liability for advance corporation tax, the amount of any such tax and the amount of any surplus of franked investment income for that accounting period shall be determined under section 89 above and Schedule 14 below as if the part of the accounting period ending with, and the part of it beginning after, that date were separate accounting periods.

Payments in respect of which company is liable to account for income tax

104

Schedule 20 to this Act shall have effect for the purpose of regulating the time and manner in which companies resident in the United Kingdom—

• (a) are to account for and pay income tax in respect of payments made after 5th April 1973 from which tax is deductible under section 53 or 54 of the Taxes Act;

• (b) are to be repaid income tax in respect of payments received by them after that date.

Returns of distributions which are not qualifying distributions

105

Schedule 21 to this Act shall have effect for the purpose of requiring companies resident in the United Kingdom to make returns and give information to the inspector in respect of distributions made by them after 5th April 1973 which are not qualifying distributions.

Amendments as to meaning of " distribution "

106

Sections 233 to 237 of the Taxes Act (meaning of " distribution ") shall have effect subject to the provisions of Schedule 22 to this Act.

Amendments as to accounting periods

107

• (1) For paragraph (c) of section 247(3) of the Taxes Act (under which a company's accounting period ends on its beginning or ceasing to carry on any trade or to be, in respect of a trade, within the charge to corporation tax) there shall be substituted—

(c) the company beginning or ceasing to trade or to be, in respect of the trade or (if more than one) of all the trades carried on by it, within the charge to corporation tax

.

• (2) For subsection (2) of section 155 of the said Act (corporation tax in respect of company's share in partnership profits etc.) there shall be substituted—

(2) A company's share in the profits or loss of any accounting period of the partnership, or in any matter excluded from the computation by proviso (b) to subsection (1) above, shall be determined according to the interests of the partners during that period, and corporation tax shall be chargeable as if that share derived from a trade carried on by the company alone in its corresponding accounting period or periods; and the company shall be assessed and charged to tax for its corresponding accounting period or periods accordingly. In this subsection "corresponding accounting period or periods " means the accounting period or periods of the company comprising or together comprising the accounting period of the partnership, and any necessary apportionment shall be made between corresponding accounting periods if more than one.

• (3) In section 252(8) of the said Act (company reconstructions without change of ownership) for the words from " the accounting periods" onwards there shall be substituted the words " any necessary apportionment shall be made of receipts or expenses ".

• (4) This section has effect in relation to accounting periods ending after 5th April 1972.

Supplementary

Power to make regulations modifying or replacing Schedules 14, 20 and 21

108

• (1) The Board may, by regulations made for any of the purposes mentioned in sections 84(5), 89(4), 104 or 105 above, modify, supplement or replace any of the provisions of Schedules 14, 20 or 21 to this Act; and references in this Act and in any other enactment to any of those Schedules shall be construed as including references to any such regulations.

• (2) Without prejudice to the generality of the preceding subsection, regulations under that subsection may, in relation to advance corporation tax or income tax for which a company is liable to account, modify any provision of Parts II to VI of the Management Act or apply any such provision with or without modifications.

• (3) Regulations under this section may—

• (a) make different provision for different descriptions of companies and for different circumstances and may authorise the Board, where in their opinion there are special circumstances justifying it, to make special arrangements as respects advance corporation tax or income tax for which a company is liable to account or the repayment of income tax borne by a company or the payment to a company of amounts in respect of any tax credit to which it is entitled ;

• (b) include such transitional and other supplemental provisions as appear to the Board to be expedient or necessary.

• (4) Regulations under this section shall be made by statutory instrument, and the Board shall not make any such regulations unless a draft of them has been laid before, and approved by a resolution of, the Commons House of Parliament.

Transitional provisions

109

Schedule 23 to this Act shall have effect with respect to the matters there dealt with, being transitional provisions relating to this Part of this Act.

Interpretation of Part V

110

• (1) In this Part of this Act—

• " franked investment income " shall be construed in accordance with section 88 above but subject to section 256(1) of the Taxes Act;

• " franked payment " shall be construed in accordance with section 84(3) above but subject to section 256(1) of the Taxes Act;

• " the Management Act " means the Taxes Management Act 1970;

• " qualifying distribution " has the meaning given in section 84(4) above;

• " surplus of franked investment income " has the meaning given in section 89(6) above ;

• " surplus advance corporation tax " has the meaning given in section 85(3) above ;

• " tax credit " means a tax credit under section 86 above ;

• " United Kingdom trust " means a trust administered under the law of any part of the United Kingdom, not being a trust the general administration of which is ordinarily carried on outside the United Kingdom and the trustees, or a majority of the trustees, of which are resident or ordinarily resident outside the United Kingdom.

• (2) References in this Part of this Act to distributions or payments received by a company apply to any received by another person on behalf of or in trust for the company but not to any received by the company on behalf of or in trust for another person.

• (3) References in this Part of this Act to using franked investment income to frank distributions of a company shall be construed in accordance with section 89(5) above.

• (4) References in this Part of this Act to an amount of profits on which corporation tax falls finally to be borne are references to the amount of those profits after making all deductions and giving all reliefs that for the purposes of corporation tax are made or given from or against those profits, including deductions and reliefs which under any provision are treated as reducing them for those purposes.

• (5) For the purposes of any reference in this Part of this Act, or in any provision amended thereby, to the rate of advance corporation tax in force for a financial year, the period beginning with 6th April 1973 and ending with 31st March 1974 shall be treated as if it were a financial year.

Consequential amendments

111

• (1) The enactments specified in Schedule 24 to this Act shall have effect with the amendments there specified, being amendments adapting and supplementing those enactments in consequence of the provisions of this Part of this Act.

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

• (3) This section has effect from 6th April 1973 and does not affect the operation of any enactment in relation to any previous time ; and no amendment in the said Schedule 24 adapting an enactment so as to make it apply or refer to a provision of this Act instead of a provision repealed thereby shall be construed as affecting the operation of that enactment in relation to the repealed provision so far as concerns matters occurring before the repeal or otherwise unaffected by it.

PART VI — Tax on Capital Gains and Estate Duty

Reduction of tax liability on disposals of shares in unit trusts, investment trusts and funds in court

112

• (1) Subject to subsections (2) and (6) below, this section applies to disposals after 5th April 1972 of—

• (a) shares in authorised unit trusts, in unit trusts to which section 38(2) of the Finance Act 1965 applies, or in investment trusts; and

• (b) shares in any common investment fund established under section 1 of the Administration of Justice Act 1965.

• (2) Paragraph (a) of subsection (1) above does not apply to any share of a class to which there would not be attributable in a liquidation of the trust the whole or a substantial part—

• (a) of the assets of the trust representing gains on capital; or

• (b) if those assets would be so attributable to two or more classes of shares, of a proportion of those assets corresponding to the proportion of all the issued shares of those classes represented by the issued shares of the class in question.

Where there are shares on which different amounts have been paid up the proportion mentioned in paragraph (b) above shall be calculated by reference to the amount paid up on the issued share capital of each class of shares.

• (3) Where gains accrue to a person in any year of assessment on any disposals to which this section applies, the capital gains tax to which he is chargeable for that year shall be reduced by a credit equal to whichever of the following amounts is the smallest—

• (a) the amount of that tax ;

• (b) an amount equal to 15 per cent. of the total chargeable gains accruing to him in that year on disposals to which this section applies ;

• (c) an amount equal to 15 per cent. of the total amount of chargeable gains accruing to him in that year on which capital gains tax is chargeable (or would have been chargeable apart from section 21 of the Finance Act 1965).

• (4) Subsection (3) above shall have effect in relation to the corporation tax chargeable on a company for an accounting period in which gains accrue to it on any disposals to which this section applies as it has effect in relation to the capital gains tax chargeable on a person other than a company, and shall so have effect as if—

• (a) references to a year of assessment were references to an accounting period ; and

• (b) for the total amount of chargeable gains mentioned in paragraph (c) of that subsection there were substituted the amount of gains charged to corporation tax for the accounting period in question increased, where subsection (5) below applies, in accordance with that subsection.

In this subsection " gains charged to corporation tax " means the profits on which corporation tax falls finally to be borne after deducting the income charged to corporation tax as defined in section 85(6) (read with section 110(4)) above except that, in relation to an accounting period for which the company claims a credit for foreign tax, those gains shall be determined in accordance with section 100(5) above.

• (5) In relation to an accounting period for which any reduction falls to be made under section 93 above in the amount to be included in respect of chargeable gains in the company's total profits, the gains mentioned in subsection (4)(b) above shall be increased by multiplying by the inverse of the fraction of that amount remaining after the reduction; and if under subsection (3) or (4) of that section the reduction falls to be made by reference to different portions of that amount, the increase under this subsection shall be made similarly, using the inverse of the fractions of those portions remaining after any reduction.

• (6) Where a person disposes after 5th April 1972 of a share—

• (a) which at the time of disposal is a qualifying share (that is to say, a share falling within subsection (1)(a) above) but has not at all times while in the ownership of that person been a qualifying share ; or

• (b) which at the time of disposal is not a qualifying share but has previously while in his ownership been such a share,

this section shall apply to the disposal but for the purposes of subsection (3)(b) above the gain accruing on the disposal shall be treated as reduced in proportion to the time for which the share was in the ownership of that person without being a qualifying share.

• (7) Where under paragraphs 4 to 7 of Schedule 7 to the Finance Act 1965 (exchanges, etc. of shares) the share of which a person disposes falls to be identified with another asset or other assets previously held by him, subsection (6) above shall have effect as if—

• (a) his period of ownership of the share disposed of included his period of ownership of the other asset or assets; and

• (b) the share disposed of had or had not been a qualifying share at any time during that additional period according to whether or not the other asset or any of those other assets was a qualifying share at that time.

• (8) Where a person disposes after 5th April 1972 of a share which at the time of disposal is a qualifying share and which he has received on a conversion of—

• (a) a share other than a qualifying share ; or

• (b) loan stock,

previously held by him, being a conversion pursuant to rights in that behalf attached to the share or stock previously held, subsections (6) and (7) above shall have effect as if that share or stock had been a qualifying share throughout any time for which the company by which it was issued was a body of the kind mentioned in subsection (1)(a) above.

• (9) Where the gain accruing on a disposal to which this section applies falls to be computed in accordance with paragraph 27(2)(b) of Schedule 6 to the Finance Act 1965 (unquoted securities held before 6th April 1965 which are subsequently converted or exchanged)—

• (a) the period of ownership of the share disposed of shall not be treated under subsection (7)(a) above as having begun before the time mentioned in the said paragraph 27(2)(b); and

• (b) for the purposes of subsection (3)(b) above the gain shall be taken to be that mentioned in sub-paragraph (ii) of the said paragraph 27(2)(b) reduced, where applicable, in accordance with subsections (6) and (7) above.

• (10) For the purposes of subsections (6) to (8) above no account shall be taken of any period of ownership before 6th April 1965; and nothing in paragraphs 4 to 7 of the said Schedule 7 shall be construed as enabling any asset to be treated as having been a qualifying share at any time when it was not such in fact.

• (11) The following provisions, that is to say—

• (a) section 37(1) of the Finance Act 1965 and that section as applied by section 38(2) of that Act (under which the amount apportioned to a share out of the net gains of a unit trust or investment trust is deductible in computing a gain on a disposal) and section 357 of the Taxes Act (which provides for making the apportionment) ; and

• (b) section 94(2) of the said Act of 1965 (which makes corresponding provision for common investment funds),

together with any apportionment already made under those provisions, shall not apply as respects any disposal after 5th April 1972 whether or not a disposal to which this section applies.

• (12) For the purposes of this section loan stock issued by an investment trust before 11th April 1972, being loan stock to which there would be attributable in a liquidation of the trust the whole of the assets of the trust representing gains on capital, shall be treated as shares in the trust falling within subsection (1)(a) above.

• (13) In this section " authorised unit trust" has the meaning given in section 358 of the Taxes Act and, subject to section 93(6) above, "investment trust" has the meaning given in section 359 of that Act.

Reduced rate of capital gains tax for unit trusts with exempt unit holders and for funds in court

113

For the year 1972-73 and subsequent years of assessment the rate of capital gains tax payable on chargeable gains accruing—

• (a) to a unit trust to which section 38(2) of the Finance Act 1965 applies (unit trusts for exempt unit holders);

• (b) to a common investment fund established under section 1 of the Administration of Justice Act 1965,

shall be 15 per cent.

Valuation of assets of and rights in unit trusts

114

• (1) Nothing in any trust deed executed before 1st September 1972 and regulating any such unit trust as is mentioned in section 112(1)(a) above shall preclude the managers of the trust or the trustee, in valuing the assets of the trust at any time during an accounting period, from making a deduction for any tax for which the trust may become liable in respect of its net gains in that period up to that time.

In this subsection " net gains " means the excess, if any, of chargeable gains over the allowable losses deductible from those gains as those gains and losses are computed for the charge to tax on the trust.

• (2) In section 44(4) of, and paragraph 22(1)(b) of Schedule 6 to, the Finance Act 1965 (valuation of rights of unit holders in unit trust scheme the prices of which are published daily by the managers of the scheme) for the words " are published daily " there shall be substituted the words " are published regularly ".

This subsection has effect in relation to disposals after 5th April 1972.

Share option schemes (capital gains tax)

115

Section 22(4) of the Finance Act 1965 (assets deemed acquired and disposed of at market value) shall not apply in calculating, for the purposes of any disposal made after 5th April 1972, the consideration given for the acquisition of shares in pursuance of a share option scheme as defined in Schedule 12 to this Act.

Consideration payable by instalments

116

• (1) In sub-paragraph (1) of paragraph 14 of Schedule 6 to the Finance Act 1965 (consideration payable by instalments) for the words from " the chargeable gain " to the end there shall be substituted the words " then, if the person making the disposal satisfies the Board that he would otherwise suffer undue hardship, the tax on a chargeable gain accruing on the disposal may, at his option, be paid by such instalments as the Board may allow over a period not exceeding eight years and ending not later than the time at which the last of the first-mentioned instalments is payable " ; and sub-paragraphs (2) to (4) of that paragraph and paragraph 5 of Schedule 11 to the Finance Act 1971 (which, in relation to relief under section 57 of that Act, makes provision corresponding to that made by paragraph 14) shall be omitted.

• (2) Subject to subsections (3) and (4) below, this section shall be deemed to have come into force on 11th April 1972.

• (3) Where, under paragraph 14 of Schedule 6 to the Finance Act 1965 as originally enacted, part of a chargeable gain would fall to be regarded as accruing before and part as accruing on or after 11th April 1972, subsection (1) above shall not apply but so much of the gain as would fall to be regarded as accruing after that date shall instead be regarded as accruing on that date; but if the person liable to pay the tax on the gain regarded as so accruing satisfies the Board that he would otherwise suffer undue hardship, the tax may, at his option, be paid by such instalments as the Board may allow.

• (4) Where, under paragraph 5 of Schedule 11 to the Finance Act 1971, part of any consideration for a disposal made before 11th April 1972 would have been deemed, for the purposes of section 57 of that Act, to be a consideration for a disposal made in a year of assessment later than 1971-72 it shall be deemed for those purposes to be a consideration for a disposal made in the year 1972-73.

Postponement of payment of tax

117

In relation to a disposal made or deemed to be made on or after 11th April 1972 the following shall be substituted for paragraph 4 of Schedule 10 to the Finance Act 1965:—

(4) (1) Where the whole or part of any assets falling within sub-paragraph (2) below is disposed of by way of gift or is under subsection (3) or subsection (4) of section 25 of this Act deemed to be disposed of, the capital gains tax chargeable on a gain accruing on the disposal may, at the option of the person liable to pay it, be paid by eight equal yearly instalments or sixteen half-yearly instalments, but subject to the payment of interest under Part IX (except sections 87 and 88) of the Taxes Management Act 1970. (2) The assets referred to in sub-paragraph (1) above are:— (a) land or an estate or interest in land; (b) any shares or securities of a company not quoted on a recognised stock exchange in the United Kingdom or elsewhere ; and (c) any assets used exclusively for the purposes of a trade, profession or vocation which, immediately before the disposal, was carried on (whether alone or in partnership) by the person by whom the disposal was made or deemed to be made. (3) Where tax is payable by instalments by virtue of this paragraph, the first instalment shall be due at the expiration of twelve months from the time of the disposal and the interest on the unpaid portion of the tax shall be added to each instalment and paid accordingly; but the tax for the time being unpaid, with interest to the date of payment, may be paid at any time, and shall become due and payable forthwith if— (a) the disposal was by way of gift to a person connected with the donor or was deemed to be made under subsection (3) or subsection (4) of section 25 of this Act; and (b) the assets are disposed of for valuable consideration under a subsequent disposal (whether or not the subsequent disposal is made by the person who acquired them under the first disposal).

Replacement of business assets

118

Section 33 of the Finance Act 1965 (replacement of business assets) shall be amended by adding after paragraph (c) of subsection (10) the words

and (d) in relation to such of the activities of a body of persons whose activities are carried on otherwise than for profit and are wholly or mainly directed to the protection or promotion of the interests of its members in the carrying on of their trade or profession as are so directed ;

and the section as so amended shall apply in any case where the acquisition of the new assets, or of the interest in the new assets, referred to therein takes place on or after 11th April 1972.

Gifts to charities

119

• (1) Subsection (2) of this section shall apply where a disposal of an asset is made, after 21st March 1972, otherwise than under a bargain at arm's length—

• (a) to a charity ; or

• (b) to any of the bodies falling within Schedule 25 to this Act.

• (2) Section 22(4) of the Finance Act 1965 (consideration deemed to be equal to market value) and section 31(3) of that Act (concession for gifts of national and other interest) shall not apply; but if the disposal is by way of gift (including a gift in settlement) or for a consideration not exceeding the sums allowable as a deduction under paragraph 4 of Schedule 6 to that Act, then—

• (a) the disposal and acquisition shall be treated for the purposes of Part III of that Act, but not for the purposes of section 57 of the Finance Act 1971 (exemption or relief for small disposals) as being made for such consideration as to secure that neither a gain nor a loss accrues on the disposal; and

• (b) where, after the disposal, the asset is disposed of by the person who acquired it under the disposal, its acquisition by the person making the earlier disposal shall be treated for the purposes of Part III of the Finance Act 1965 as the acquisition of the person making the later disposal.

• (3) Where, otherwise than on the termination of a life interest (within the meaning of section 25 of the Finance Act 1965) by the death of the person entitled thereto, any assets or parts of any assets forming part of settled property are, under subsection (3) or subsection (4) of that section, deemed to be disposed of and re-acquired by the trustee, and—

• (a) the person becoming entitled as mentioned in subsection (3) of that section is a charity or a body falling within Schedule 25 to this Act; or

• (b) any of the assets which, or parts of which, are deemed to be disposed of and re-acquired under subsection (4) of that section are held for the purposes of a charity or a body falling within Schedule 25 to this Act;

then, if no consideration is received by any person for or in connection with any transaction by virtue of which the charity or other body becomes so entitled or the assets are so held, the disposal and re-acquisition of the assets to which the charity or other body becomes so entitled or of the assets or parts of the assets which are held as mentioned in paragraph (b) above shall, notwithstanding those subsections, be treated for the purposes of Part III of that Act as made for such consideration as to secure that neither a gain nor a loss accrues on the disposal.

Alteration of amount of estate duty

120

Estate duty: relief for surviving spouse, charities and certain institutions

121

PART VII — Miscellaneous

Abolition of selective employment tax

122

Registered trade unions

123

Payments to or by Export Credits Guarantee Department under investment insurance scheme

124

Reduction of stamp duty on conveyances and leases

125

Abolition of stamp duty on bank notes and of bankers' licences

126

Disclosure of information between revenue departments

127

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

Vehicle excise duty-disabled persons

128

• (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Summary award of penalties

129

Compensation for loss of office etc. by clerks to General Commissioners

130

• (1) The Commissioners of Inland Revenue may, with the concurrence of the Minister for the Civil Service, by regulations provide for the payment out of money provided by Parliament of compensation to or in respect of any clerk to the General Commissioners for any division who suffers or has suffered loss of office or loss or diminution of emoluments which is attributable to any order affecting that division made (whether before or after the passing of this Act) under section 2(6) of the Taxes Management Act 1970 (alteration and abolition of divisions).

• (2) Regulations under this section may—

• (a) include provision as to the manner in which and the person to whom any claim for compensation under the regulations is to be made, and for the determination of all questions arising under the regulations;

• (b) make different provision for different classes of persons and for different circumstances, and make, or authorise the Commissioners of Inland Revenue to make, exceptions and conditions;

• (c) be framed so as to have effect from a date earlier than the making of the regulations,

but so that regulations having effect from a date earlier than their making shall not place any individual in a worse position than he would have been in if the regulations had been so framed as to have effect only from the date of their making.

• (3) Regulations under this section shall be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.

Post-war credits

131

• (1) On the repayment of any post-war credit, or payment to a building society of any amount outstanding under section 3 of the Income Tax (Repayment of Post-War Credits) Act 1959, the sum payable, inclusive of the interest, may be taken by the Commissioners of Inland Revenue as amounting to 138 per cent. of the credit as notified under section 7 of the Finance Act 1941 or of the amount so outstanding, as the case may be.

• (2) An application for such repayment made before the applicant is qualified may, if he later becomes qualified, be treated as made on the date when he does so.

• (3) No such repayment shall be made unless application therefor is made before such time (not earlier than the beginning of the year 1974) as the Treasury may by order direct.

Any order under this subsection shall be made by statutory instrument, which shall be laid before Parliament after being made, and may be varied by a subsequent order so as to extend the time for applications for repayment.

• (3A) An order under subsection (3) above may make different provision for different cases or classes of case and may provide that no amount shall be ascertained, recorded or notified under section 7 of the Finance Act 1941 after any such time as may be specified in the order.

• (4) In this section “post-war credit” has the same meaning as in the Income Tax (Repayment of Post-War Credits) Act 1959.

• (5) This section shall be deemed to have had effect from the beginning of April 1972.

Local loans

132

Advances to trustee savings banks

133

Citation, interpretation, construction, extent and repeals

134

• (1) This Act may be cited as the Finance Act 1972.

• (2) In this Act “the Taxes Act” means the Income and Corporation Taxes Act 1988.

• (3) In this Act—

• (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (b) Parts IV and V, so far as they relate to income tax, shall be construed as one with the Income Tax Acts and, so far as they relate to corporation tax, shall be construed as one with the Corporation Tax Acts;

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

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

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

• (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (6) If the Parliament of Northern Ireland passes provisions amending or replacing any enactment of that Parliament referred to in this Act the reference shall be construed as a reference to the enactment as so amended or, as the case may be, as a reference to those provisions.

• (7) The enactments mentioned in Schedule 28 to this Act are hereby repealed to the extent mentioned in the third column of that Schedule, but subject to any provision at the end of any Part of that Schedule.

SCHEDULES 1—6

Liability to be registered

1

A person who makes taxable supplies but is not registered is liable to be registered—

• (a) after the end of any quarter, if the value of his taxable supplies in the period of one, two, three or four quarters then ending has exceeded the amount shown in the following Table as applicable to that period ; or

• (b) at any time, if there are reasonable grounds for believing that the value of his taxable supplies in the period of one year beginning at that or any later time will exceed £5,000 ;

except that a person is not liable to be registered by virtue of sub-paragraph (a) above on the ground that the value of his taxable supplies in a period of less than a year has exceeded the amount applicable to that period if the Commissioners are satisfied that the value of his taxable supplies in that period and the remaining quarter or quarters of the year will not exceed £5,000.

Number of quarters comprised in period	Amount applicable
	£
1	1,750
2	3,000
3	4,250
4	5,000

2

A registered person who makes taxable supplies shall cease to be liable to be registered—

• (a) after the end of any quarter, if he has been registered for the whole of the two years then ending and the value of his taxable supplies in each of those years has been £4,000 or less, or the value of his taxable supplies in each of the quarters comprised in those years has been £1,250 or less ; and

• (b) at any time, if the Commissioners are satisfied that the value of his taxable supplies in the period of one year then beginning will be £4,000 or less.

Notification of liability and registration

3

A person who, on 1st April 1973, will be liable to be registered shall notify the Commissioners of that fact within ten days of the earliest date after September 1972 on which he knows or could with reasonable diligence have known that he will be so liable or within such longer time as the Commissioners may allow ; and the Commissioners shall register any such person with effect from 1st April 1973.

4

The following three paragraphs apply to persons not required to notify the Commissioners under paragraph 3 of this Schedule.

5

A person who by virtue of paragraph 1(a) of this Schedule is liable to be registered after the end of any quarter shall notify the Commissioners of his liability within ten days of the end of that quarter and the Commissioners shall register any such person with effect from the twenty-first day of the next quarter or such earlier date as may be agreed between them and that person.

6

A person who, by virtue of paragraph 1(b) of this Schedule, is liable to be registered by reason of the value of his taxable supplies in any period shall notify the Commissioners of that liability not later than the beginning of that period, and the Commissioners shall register any such person with effect from the beginning of that period or such earlier date as may be agreed between them and that person.

7

Where a person who intends to make taxable supplies, and will be liable to be registered when he does so, notifies the Commissioners of the fact and requests to be registered the Commissioners may, subject to such conditions as they think fit to impose, register him from such date as may be agreed between them and that person.

Notification of end of liability and cancellation of registration

8

A registered person who ceases to make taxable supplies shall notify the Commissioners of that fact within ten days of the date on which he does so and the Commissioners shall cancel the registration of any such person.

9

Where, by virtue of paragraph 2(a) of this Schedule, a registered person ceases to be liable to be registered and notifies the Commissioners of that fact, the Commissioners shall cancel his registration with effect from the end of the period of fourteen days beginning with the date on which he so notifies them or from such other date as may be agreed between them and that person.

10

Where a registered person requests the Commissioners to cancel his registration by virtue of paragraph 2(b) of this Schedule and the Commissioners are at any time satisfied as mentioned in that paragraph they shall cancel his registration as from that time.

Discretionary registration or exemption from registration

11

Notwithstanding the preceding provisions of this Schedule,—

• (a) where a person who makes or intends to make taxable supplies satisfies the Commissioners that any such supply is zero-rated or would be zero-rated if he were a taxable person they may, if he so requests and they think fit, exempt him from registration ; and

• (b) where a person who makes or intends to make taxable supplies is not and will not be liable to be registered the Commissioners may, if he so requests and they think fit, treat him as so liable, subject to such conditions as they think fit to impose ;

until it appears to the Commissioners that the request should no longer be acted upon or the request is withdrawn; but the Commissioners may by notice given in such manner as appears to them appropriate for the information of persons making taxable supplies prevent the withdrawal of such a request made after the publication of the notice for such period after it is made as may be specified in the notice.

Supplementary

12

The provisions of this Part of this Act relating to the determination of the value of a supply of goods or services shall apply for the purposes of this Schedule with the modification that no allowance shall be made for tax.

13

Any notification required under this Schedule shall be made in such form and shall contain such particulars as the Commissioners may by regulations prescribe.

14

References in this Schedule to registration are references to registration in a register kept by the Commissioners for the purposes of this Part of this Act.

SCHEDULE 2

1

Where goods acquired or produced by a taxable person in the course of a business carried on by him are applied by him to the personal use of himself or any other person they shall be deemed to be supplied by him in the course of that business.

2

Where goods acquired or produced by a taxable person in the course of a business carried on by him are, under any power exercisable by another person, sold by the other person in or towards satisfaction of a debt owed by the taxable person they shall be deemed to be supplied by the taxable person in the course of that business.

3

Where a person ceases to be a taxable person, any goods then forming part of the assets of a business carried on by him shall be deemed to be supplied by him in the course of that business immediately before he ceases to be a taxable person, unless—

• (a) the business is transferred as a going concern to another taxable person ; or

• (b) the business is carried on by another person who, under regulations made under section 23(3) of this Act, is treated as a taxable person.

SCHEDULE 3

1

Where it appears to the Commissioners—

• (a) that a taxable person has supplied goods or services for a consideration in money the amount of which has been determined with a view to securing a reduction of liability to tax ; and

• (b) that it is likely that goods or services will be similarly supplied by him ; and

• (c) that it is necessary for the protection of the revenue to exercise their powers under this paragraph ;

they may by notice in writing give directions to that person for securing that the value by reference to which tax is charged on any supply by him of goods or services after the giving of the notice or after such later date as may be specified therein is not less than the open market value of the supply.

2

Where it appears to the Commissioners—

• (a) that a taxable person carries on his business or part of his business by supplying to a number of individuals goods to be sold, whether by them or others, by retail; and

• (b) that those individuals are not taxable persons ; and

• (c) that it is necessary for the protection of the revenue to exercise their powers under this paragraph ;

they may by notice in writing give directions to the taxable person for securing that the value by reference to which tax is charged on any such supply by him after the giving of the notice or after such later date as may be specified therein shall be determined as if the consideration given by any such individual for the supply were equal to the price at which the goods are sold by retail.

3

Where goods are supplied in pursuance of an agreement with respect to which the requirements of section 7 of the Hire-Purchase Act 1965, section 7 of the Hire-Purchase (Scotland) Act 1965 or section 7 of the Hire-Purchase Act (Northern Ireland) 1966 are complied with the consideration for the supply shall be taken for the purposes of this Part of this Act to be the cash price stated in the agreement.

4

Where goods or services are supplied for a consideration in money which is to be reduced if payment is made immediately or within a specified time the consideration shall be taken for the purposes of this Part of this Act as so reduced whether or not payment is so made.

5

Where a right to receive goods or services for an amount stated on any token, stamp or voucher is granted for a consideration, the consideration shall be disregarded for the purposes of this Part of this Act except to the extent (if any) that it exceeds that amount.

6

Where a supply is a gift of goods or a supply deemed to be made under paragraph 1 of Schedule 2 to this Act, the value of the supply shall be taken to be the cost of the goods to the person making the supply ; except that if that cost does not exceed £10 and the supply is a gift its value shall be taken to be nil.

7

Where a supply of services consists in the provision of accommodation in a hotel, inn, boarding house or similar establishment for a period exceeding four weeks—

• (a) the value of so much of the supply as is in excess of four weeks shall be taken to be reduced to such part thereof as is attributable to facilities other than the right to occupy the accommodation ; and

• (b) that part shall be taken to be not less than 20 per cent.

8

A direction under paragraph 1 or paragraph 2 of this Schedule may be varied or withdrawn by the Commissioners by a further direction given by notice in writing.

SCHEDULES 9—23

GROUP 1—FOOD

The supply of anything comprised in the general items set out below, except—

General items

Item No.

Excepted items

Item No.

Items overriding the exceptions

Item No.

Notes :

GROUP 2—WATER

Item No.

GROUP 3—BOOKS, ETC.

Item No.

Note : This Group does not include plans or drawings for industrial, architectural, engineering, commercial or similar purposes.

GROUP 4—TALKING BOOKS FOR THE BLIND

Item No.

GROUP 5—NEWSPAPER ADVERTISEMENTS

Item No.

GROUP 6—NEWS SERVICES

Item No.

Note : This item does not include the supply of photographs.

GROUP 7—FUEL AND POWER

Item No.

GROUP 8—CONSTRUCTION OF BUILDINGS, ETC.

Item No.

Notes :

GROUP 9—SERVICES TO OVERSEAS TRADERS OR FOR OVERSEAS PURPOSES

Item No.

Notes :

GROUP 10—TRANSPORT

Item No.

Notes :

GROUP 11—CARAVANS

Item No.

Note : This item does not include removable contents other than goods of a kind mentioned in Item 3 of Group 8.

GROUP 12—GOLD

Item No.

Notes :

GROUP 13—BANK NOTES

Item No.

GROUP 14—DRUGS, MEDICINES AND APPLIANCES SUPPLIED ON PRESCRIPTION

Item No.

Note : Section 12(3) of this Act does not apply to goods forming part of this description of supply.

SCHEDULE 5

GROUP 1—LAND

Item No.

GROUP 2—INSURANCE

Item No.

GROUP 3—POSTAL SERVICES

Item No.

Note : " Postal packet" has the same meaning as in the Post Office Act 1953, except that it does not include a telegram.

GROUP 4—BETTING, GAMING AND LOTTERIES

Item No.

Notes :

GROUP 5—FINANCE

Item No.

Note : Item 1 does not include anything included in Item 4.

GROUP 6—EDUCATION

Item No.

Notes :

GROUP 7—HEALTH

Item No.

GROUP 8—BURIAL AND CREMATION

Item No.

SCHEDULE 6

Establishment of Value Added Tax Tribunals

1

Value added tax tribunals shall be established for England and Wales, Scotland and Northern Ireland respectively.

The President

2

• (1) There shall be a President of Value Added Tax Tribunals, who shall perform the functions conferred on him by the following provisions of this Schedule in relation to value added tax tribunals in any part of the United Kingdom.

• (2) The President shall be appointed by the Lord Chancellor and shall be a barrister, advocate or solicitor of not less than ten years' standing.

3

• (1) The President may resign his office at any time and shall vacate his office at the end of the completed year of service in which he attains the age of seventy-two.

• (2) The Lord Chancellor may, if he thinks fit, remove the President from office on the ground of incapacity or misbehaviour.

• (3) The functions of the President may, if he is for any reason unable to act or his office is vacant, be discharged by a person nominated for the purpose by the Lord Chancellor.

• (4) There shall be paid to the President such salary or fees and there may be paid to or in respect of a former President such pension, as the Treasury may with the approval of the Minister for the Civil Service determine.

• (5) If a person ceases to be President of Value Added Tax Tribunals and it appears to the Treasury that there are special circumstances which make it right that he should receive compensation and the Minister for the Civil Service approves, there may be paid to that person a sum of such amount as the Treasury may, with the approval of that Minister, determine.

Sittings of tribunals

4

Such number of value added tax tribunals shall be established as the President may from time to time with the consent of the Treasury determine, and they shall sit at such times and at such places as he may from time to time determine.

Composition of tribunals

5

• (1) A value added tax tribunal shall consist of a chairman sitting either with two other members or with one other member or alone.

• (2) If the tribunal does not consist of the chairman sitting alone its decisions may be taken by a majority of votes and the chairman, if sitting with one other member, shall have a casting vote.

Membership of tribunals

6

For each sitting of a value added tax tribunal the chairman shall be either the President or a person selected by him from a panel constituted in accordance with paragraph 7 of this Schedule ; and any other member shall be a person so selected.

7

• (1) There shall be a panel of chairmen and a panel of other members of value added tax tribunals for England and Wales, Scotland and Northern Ireland respectively.

• (2) Each panel of chairmen shall include one or more full-time chairmen, including one to be known as Vice-President of Value Added Tax Tribunals.

• (3) A member of a panel appointed as full-time chairman shall be appointed—

• (a) for England and Wales, by the Lord Chancellor ;

• (b) for Scotland, by the Lord President of the Court of Session ; and

• (c) for Northern Ireland, by the Lord Chief Justice of Northern Ireland;

and all other members of a panel shall be appointed by the Treasury.

• (4) There shall be paid to a full-time chairman of value added tax tribunals such salary or fees, and to other members such fees, as the Treasury, with the approval of the Minister for the Civil Service, may determine ; and there may be paid to or in respect of a former full-time chairman of value added tax tribunals such pension as the Treasury may, with that approval, determine.

• (5) If a person ceases to be a full-time chairman of value added tax tribunals and it appears to the Treasury that there are special circumstances which make it right that he should receive compensation and the Minister for the Civil Service approves, there may be paid to that person a sum of such amount as the Treasury may, with the approval of that Minister, determine.

Disqualifications for membership of House of Commons and exemption from jury service

8

In Part II of Schedule 1 to the House of Commons Disqualification Act 1957 (bodies of which all members are disqualified for membership) and in that Part as it applies by virtue of Schedule 3 to that Act in relation to the Senate and House of Commons of Northern Ireland, there shall be inserted at the appropriate place the words " A value added tax tribunal ".

9

No member of a value added tax tribunal shall be compelled to serve on any jury.

Rules of procedure

10

The Commissioners may make rules with respect to the procedure to be followed on appeals to value added tax tribunals and such rules may include provisions—

• (a) for limiting the time within which appeals may be brought;

• (b) for enabling hearings to be held in private in such circumstances as may be determined by or under the rules ;

• (c) for parties to proceedings to be represented by such persons as may be determined by or under the rules ;

• (d) for requiring persons to attend to give evidence and produce documents ;

• (e) for the payment of expenses and allowances to persons attending as witnesses ;

• (f) for the award and recovery of costs ; and

• (g) for authorising the administration of oaths to witnesses.

SCHEDULE 7

Interpretation

1

In this Schedule " authorised person " means any person acting under the authority of the Commissioners, " the Commissioners " means the Commissioners of Customs and Excise, " the tax " means car tax and " chargeable vehicle " and (in relation to vehicles) " registered " have the same meanings as in section 52 of this Act; and references to the making of a chargeable vehicle shall be construed as in that section.

Administration and collection of tax

2

• (1) The tax shall be under the care and management of the Commissioners.

• (2) All money and securities for money collected or received for or on account of the tax shall—

• (a) if collected or received in Great Britain, be placed to the general account of the Commissioners kept at the Bank of England under section 11 of the Customs and Excise Act 1952;

• (b) if collected or received in Northern Ireland, be paid into the Consolidated Fund of the United Kingdom in such manner as the Treasury may direct.

• (3) The Government of Ireland Act 1920 shall have effect as if the tax were one of the taxes mentioned in section 22(1) of that Act (reserved taxes).

• (4) The Provisional Collection of Taxes Act 1968 shall be amended by inserting in subsection (1) of section 1, after the words " value added tax " the words " car tax "; and the Act as so amended shall apply in relation to a resolution of the House of Commons passed before 1st April 1974 and providing for any variation of the tax as it applies in relation to such a resolution as is mentioned in subsection (2)(a) of that section.

Liability to and payment of tax

3

Subject to paragraph 6 of this Schedule, the tax on any vehicle shall be payable—

• (a) if the vehicle is made or imported by a person registered under this Schedule, by that person; and

• (b) in any other case by the person who for the purposes of the registration of the vehicle is treated as the person keeping the vehicle.

4

• (1) Where tax on a vehicle is payable by a person registered under this Schedule, it shall become due—

• (a) if the vehicle is appropriated to the use of that person, at the time when it is so appropriated;

• (b) if it is delivered under an agreement providing for its sale or return, at the time when, in accordance with the agreement, it ceases to be the property of that person or when it is treated for the purposes of the tax as so ceasing to be his property in pursuance of regulations made under this Schedule;

• (c) in any other case, when it is sent out from the premises of that person;

and shall become payable at the time provided for by those regulations.

• (2) For the purposes of this paragraph, a vehicle which is to be sold by retail by a person registered under this Schedule shall be deemed to be sent out from the premises of that person when it is sent to the place from which it is to be sold.

5

Where tax on a vehicle is payable as mentioned in paragraph 3(b) of this Schedule it shall become due and payable before the vehicle is registered.

6

• (1) Where a chargeable vehicle is made by the conversion of a vehicle which is not a chargeable vehicle and the person converting it is not registered under this Schedule, the tax on the vehicle shall become due—

• (a) at the time the conversion is completed; or

• (b) at the time when the vehicle is first used after the conversion was begun;

whichever is the earlier, and shall be payable by the person who is the owner of the vehicle at the time the tax becomes due; except that if at that time a person other than the owner is entitled to possession of the vehicle under a hire-purchase agreement the tax shall be payable by that person instead of by the owner,

• (2) Where another person carries out the conversion under a contract to the order of the person by whom the tax is payable he shall be accountable for the tax as well as that person but may recover from him any tax paid in pursuance of this sub-paragraph.

Relief for vehicles exported

7

Tax shall not be charged on any vehicle which is shown to the satisfaction of the Commissioners to have been exported and not to have been registered before it was exported or which is to be exported under arrangements approved by the Commissioners and is not registered.

Remission of tax on vehicles acquired for export

8

• (1) Where it is shown to the satisfaction of the Commissioners that a person who acquires a chargeable vehicle is only temporarily in the United Kingdom or is about to become resident outside the United Kingdom the Commissioners may, subject to such conditions as they think necessary for the protection of the revenue, remit the tax on the vehicle.

• (2) If tax has been remitted on a vehicle under sub-paragraph (1) of this paragraph and—

• (a) the vehicle is found in the United Kingdom after the date by which the Commissioners on granting the remission directed that it should be exported; or

• (b) any other condition imposed by the Commissioners under that sub-paragraph is not complied with;

and the presence of the vehicle in the United Kingdom after that date or the non-observance of that condition has not been authorised for the purposes of this sub-paragraph by the Commissioners, the tax which would have been payable but for the remission shall become payable forthwith by the person by whom the vehicle was acquired or by any other person in whose possession the vehicle is found in the United Kingdom, and shall be recoverable as a debt due to the Crown, unless, or except to the extent that, the Commissioners see fit to waive payment of the whole or part, thereof.

Remission of tax on vehicles used outside United Kingdom

9

• (1) Regulations under this Schedule may make provision for enabling the Commissioners to remit the tax on a chargeable vehicle, subject to such conditions as they think necessary for the protection of the revenue, where the vehicle has been used and owned outside the United Kingdom for not less than such period as may be prescribed by the regulations and such other conditions are satisfied as may be so prescribed ; and the conditions that may be imposed in pursuance of the regulations may include conditions prohibiting or restricting the disposal of the vehicle for such period as may be so prescribed.

• (2) If tax has been remitted on a vehicle under sub-paragraph (1) of this paragraph and any condition imposed by the Commissioners under that sub-paragraph is not complied with, the tax which would have been payable but for the remission shall be payable forthwith by the person who then owns the vehicle or by any other person in whose possession the vehicle is found, and shall be recoverable as a debt due to the Crown, unless, or except to the extent that, the Commissioners see fit to waive payment of the whole or part thereof.

Remission of tax on chargeable vehicles converted into other vehicles

10

Where it is shown to the satisfaction of the Commissioners that, under arrangements approved by them, an unused vehicle which was a chargeable vehicle has been converted into a vehicle which is not a chargeable vehicle, they may, subject to such conditions as they think necessary for the protection of the revenue, remit the tax on the vehicle.

Wholesale value

11

• (1) For the purposes of the tax the wholesale value of any vehicle shall be taken, subject to paragraph 13(2) of this Schedule, to be the price which, in the opinion of the Commissioners, the vehicle would fetch on a sale made at the time the tax becomes due by a person selling by wholesale in the open market in the United Kingdom to a retail trader carrying on business in the United Kingdom only, on the assumption that—

• (a) the price was the sole consideration for the sale; and

• (b) the vehicle was to be delivered to the retail trader at the seller's place of business; and

• (c) neither the tax nor value added tax was payable.

• (2) In this paragraph " retail trader " means a person who sells by retail and does not sell to a person who carries on a business of selling vehicles.

Disputes as to wholesale value

12

• (1) Where the person by whom the tax is payable is dissatisfied with the determination of the wholesale value by the Commissioners he may, within such period from the time when their decision is communicated to him as may be prescribed by regulations under this Schedule or such further time as the Commissioners may allow, by notice in writing given to the Commissioners require the determination to be referred to the arbitration of a person appointed under this paragraph, whose decision shall be final and conclusive; but no such reference shall be made unless, within that period or such further time as the Commissioners may allow, the person requiring the reference has deposited with the Commissioners the amount of tax which would be due on the basis of their determination.

• (2) If the tax chargeable as a result of a reference under this paragraph is less than the amount deposited with the Commissioners the excess shall be repaid with interest at such rate as the referee may determine.

• (3) A referee for the purposes of this paragraph shall be appointed by the Lord Chancellor except that—

• (a) if the person by whom the tax is payable has his principal place of business in Scotland, the referee shall be appointed by the Lord President of the Court of Session; and

• (b) if that person has his principal place of business in Northern Ireland, the referee shall be appointed by the Lord Chief Justice of Northern Ireland.

Unfinished vehicles

13

• (1) For the purposes of the tax a vehicle which is not finished and complete but which, if finished and complete, would be a chargeable vehicle shall be treated as a chargeable vehicle.

• (2) If in the opinion of the Commissioners a vehicle is not finished and complete, they shall determine its wholesale value as if it were finished and complete, having regard to the parts and accessories that remain to be provided and the processes that remain to be undergone for the vehicle to be in a state to be expected of a finished and complete chargeable vehicle.

Converted and adapted vehicles

14

Where it appears to the Commissioners that a person adapts or converts unused chargeable vehicles and that the vehicles as so adapted or converted remain chargeable vehicles they may direct—

• (a) that the conversion or adaptation shall for the purposes of the tax be treated as the making of the vehicles resulting from it, whether or not it would otherwise fall to be so treated; and

• (b) that, subject to such conditions as they think necessary for the protection of the revenue, tax shall not be charged on vehicles delivered to that person, under arrangements approved by the Commissioners, by a person registered under this Schedule;

and where they so direct that person shall, while the direction is in force, be liable to be registered under this Schedule, whether or not he would otherwise be so liable.

Registration of makers and importers of chargeable vehicles

15

• (1) A person who, in any calendar year, makes or imports not less than ten chargeable vehicles is liable to be registered by the Commissioners.

• (2) Every person who, on or after 1st October 1972, is liable to be registered under this paragraph and is not for the time being so registered shall notify the Commissioners of the fact within fourteen days of that date or of becoming so liable, whichever is the later; and the Commissioners may, if they think fit, register any such person.

• (3) A person for the time being registered under this paragraph who ceases to make or import chargeable vehicles shall notify the Commissioners of that fact and the Commissioners shall cancel the registration of any such person when all tax due from him has been accounted for; and they may, if they think fit, cancel the registration of any other person.

• (4) The Treasury may from time to time by order made by statutory instrument substitute another number for that specified in sub-paragraph (1) of this paragraph.

A statutory instrument made by virtue of this sub-paragraph shall be subject to annulment in pursuance of a resolution of the Commons House of Parliament.

Recovery of tax

16

• (1) The tax due from any person shall be recoverable as a debt due to the Crown.

• (2) Regulations under this Schedule may make provision for authorising distress to be levied on the goods and chattels of any person refusing or neglecting to pay any tax due from him, and for the disposal of any goods or chattels on which distress is levied in pursuance of the regulations.

• (3) In the application of the preceding sub-paragraph to Scotland, for the references to the levying of distress on any goods or chattels there shall be substituted references to the doing of diligence on goods and corporeal movables.

Power of Commissioners to assess tax due

17

• (1) Where an amount is due from any person on account of the tax, but by reason of his failure to keep or to produce or furnish any records, accounts or other documents as required by or under this Schedule, or of his failure to take or permit to be taken any other step so required, or by reason of such records, accounts or other documents being materially incomplete or inaccurate, the Commissioners are unable to ascertain the exact amount of tax due from him, the Commissioners may assess the amount due from him to the best of their judgment and notify it to him.

• (2) An assessment under this paragraph of an amount of tax due shall not be made after the later of the following:—

• (a) two years after the time when the amount became payable; or

• (b) one year after evidence of facts, sufficient in the opinion of the Commissioners to justify the making of the assessment, comes to their knowledge;

but may, where further such evidence comes to their knowledge after the making of such an assessment, be made in addition to that assessment; but no such assessment shall be made more than six years after the time when the tax became payable, except for the purpose of recovering tax lost to the Crown through the fraud or wilful default or neglect of any person.

• (3) An amount assessed and notified under this paragraph shall be recoverable as an amount of tax due unless in any action relating thereto the person liable proves the amount actually due and that amount is less than the amount assessed.

Priority of tax in bankruptcy, winding-up, etc.

18

• (1) There shall be included among the debts which—

• (a) under section 33 of the Bankruptcy Act 1914 are to be paid in priority to all other debts in the distribution of the property of a bankrupt or person dying insolvent; or

• (b) under section 118 of the Bankruptcy (Scotland) Act 1913 are to be paid in priority to all other debts in the division of a bankrupt's estate; or

• (c) under section 1 of the Preferential Payments (Bankruptcies and Arrangements) Act (Northern Ireland) 1964 are to be paid in priority to all other debts in the distribution of the property of a bankrupt, arranging debtor or person dying insolvent; or

• (d) under section 319 of the Companies Act 1948 or section 287 of the Companies Act (Northern Ireland) 1960 are to be paid in priority to all other debts in the winding up of a company, or under section 94 of the Act of 1948 or section 92 of the Act of 1960 are on an appointment of a receiver on behalf of debenture holders or taking of possession by or on behalf of debenture holders to be paid in priority to any claim for principal or interest in respect of the debenture;

the amount of any tax due at the relevant date from the bankrupt, debtor, person dying or company and having become due within twelve months next before that date.

• (2) In this paragraph " the relevant date "—

• (a) in relation to section 33 of the Act of 1914, means the date of the receiving order or of the death, as the case may be;

• (b) in relation to section 118 of the Act of 1913, means the date mentioned in subsection (4) of that section;

• (c) in relation to section 1 of the Act of 1964, means the date of the order of adjudication, the date of the filing of a petition for arrangement or of the death, as the case may be; and

• (d) in relation to section 319 of the Act of 1948, or section 287 of the Act of 1960, has the meaning assigned to it by that section, and in relation to section 94 of the Act of 1948 or section 92 of the Act of 1960, means the date of the appointment of the receiver or taking of possession.

Records, accounts and returns

19

• (1) A person registered under this Schedule shall—

• (a) keep such records and accounts and preserve them for such period as may be prescribed by regulations under this Schedule or as the Commissioners may direct either generally or in any particular case;

• (b) if so required by or on behalf of the Commissioners, produce, at a time and place specified in the requirement, such records or accounts relating to the chargeable vehicles made or imported by him as may be so specified; and

• (c) make such returns of the chargeable vehicles made or imported by him and of the amounts of tax for which he is accountable as may be prescribed by regulations under this Schedule.

• (2) A person who, in the course of a business carried on by him, has chargeable vehicles delivered to him on which tax has not been paid shall—

• (a) keep such records and preserve them for such periods as may be prescribed by regulations under this Schedule or as the Commissioners may direct either generally or in any particular case;

• (b) if so required by or on behalf of the Commissioners, produce, at a time and place specified in the requirement, such records relating to the vehicles as may be so specified; and

• (c) make to the persons by whom the vehicles are sent such returns of the vehicles ceasing or treated as ceasing to be that person's property as may be prescribed by regulations under this Schedule.

Giving of information

20

• (1) Every person who is concerned (in whatever capacity) with the making, sale, importation or exportation of chargeable vehicles shall—

• (a) furnish to the Commissioners, within such time and in such form as they may require, such information relating to the vehicles or any materials used or kept for use in making such vehicles as the Commissioners may specify; and

• (b) upon demand made by an authorised person produce or cause to be produced any documents relating to the vehicles or any materials used or kept for use in making such vehicles for inspection by the authorised person and shall permit him to take copies of or to make extracts from the documents and for that purpose to remove them at a reasonable time and for a reasonable period.

• (2) Every person who converts a vehicle of another description into a chargeable vehicle shall inform the Commissioners of that fact forthwith unless he is a person registered under this Schedule.

Entry and search

21

• (1) An authorised person may at any reasonable time enter premises which are used in connection with the making, sale, importation or exportation of chargeable vehicles.

• (2) Where an authorised person has reasonable cause to believe that any premises are used in connection with—

• (a) the making, sale, importation or exportation of chargeable vehicles; or

• (b) the storage of chargeable vehicles on which tax has not been paid;

and that chargeable vehicles are on those premises, he may at any reasonable time enter and inspect those premises and inspect and take account of any vehicles or materials found on them.

• (3) If a justice of the peace is satisfied on information on oath that there is reasonable ground for suspecting that an offence in connection with the tax is being, has been, or is about to be committed on any premises, or that evidence of the commission of such an offence is to be found there, he may issue a warrant in writing authorising any authorised person to enter those premises, if necessary by force, at any time within fourteen days from the time of the issue of the warrant and search them; and any person who enters the premises under the authority of the warrant may—

• (a) take with him such other persons as appear to him to be necessary;

• (b) seize and remove any documents or other things whatsoever found on the premises which he has reasonable cause to believe may be required as evidence for the purposes of proceedings in respect of such an offence; and

• (c) search or cause to be searched any person found on the premises whom he has reasonable cause to believe to have committed or to be about to commit such an offence or to be in possession of any such documents or other things;

but no woman or girl shall be searched except by a woman.

• (4) In the application of sub-paragraph (3) above to Scotland, the reference to a justice of the peace includes a reference to the sheriff and a magistrate.

Offences

22

• (1) If any person is knowingly concerned in, or in the taking of steps with a view to, the fraudulent evasion of the tax by him or any other person, he shall be liable to a penalty of £1,000 or three times the amount of the tax, whichever is the greater, or to imprisonment for a term not exceeding two years, or to both.

• (2) If any person—

• (a) with intent to deceive produces, furnishes or sends for the purposes of this Schedule or regulations made under it or made by virtue of paragraph 27 of this Schedule, or otherwise makes use for those purposes of any document which is false in a material particular; or

• (b) in furnishing any information for the purposes of this Schedule or regulations made under it makes any statement which he knows to be false in a material particular or recklessly makes a statement which is false in a material particular; or

• (c) with intent to deceive uses or allows to be used any certificate issued in pursuance of regulations under this Schedule;

he shall be liable to a penalty of £1,000 or to imprisonment for a term not exceeding two years, or to both.

• (3) If any person acquires possession of, deals with or uses a chargeable vehicle having reason to believe—

• (a) that tax on the vehicle has been or will be evaded; or

• (b) that the vehicle ought to have been registered but that tax on it has not been paid;

he shall be liable to a penalty of £1,000 or three times the amount of the tax, whichever is the greater.

• (4) If a person fails to comply with any requirement imposed by or under this Schedule or regulations made under it, he shall be liable to a penalty of £100 together with a penalty of £10 for each day on which the failure continues.

• (5) Sections 281 to 291 of the Customs and Excise Act 1952 (proceedings for offences, mitigation of penalties and certain other matters) shall apply in relation to offences under this paragraph (which include any act or omission in respect of which a penalty is imposed) and penalties imposed under this Schedule as they apply in relation to offences and penalties under the customs and excise Acts as defined in that Act.

• (6) Section 290(2) of the Customs and Excise Act 1952 as it applies by virtue of this paragraph shall have effect as if the question mentioned in paragraph (a) thereof were the question whether or not tax on any vehicle has become due or has been paid or secured.

Forfeiture

23

A chargeable vehicle shall be liable to forfeiture under the Customs and Excise Act 1952 if—

• (a) tax on it would have become payable before its registration and it ought to have been but has not been registered; or

• (b) tax on it ought to have been, but has not been, paid; or

• (c) tax on it has been remitted subject to a condition and the condition has not been complied with.

Evidence by certificate

24

• (1) A certificate of the Commissioners—

• (a) that a person was or was not, at any date, registered under this Schedule; or

• (b) that any return required by or under this Schedule has not been made or had not been made at any date; or

• (c) that any tax shown as due in any return or assessment made in pursuance of this Schedule has not been paid;

shall be sufficient evidence of the fact until the contrary is proved; and any document purporting to be such a certificate shall be deemed to be such a certificate until the contrary is proved.

• (2) A photograph of any document furnished to the Commissioners for the purposes of this Schedule and certified by them to be such a photograph shall be admissible in any proceedings, whether civil or criminal, to the same extent as the document itself.

• (3) Any document purporting to be a certificate under sub-paragraph (2) of this paragraph shall be deemed to be such a certificate until the contrary is proved.

Service of notices

25

A notice to be served on any person for any of the purposes of this Schedule may be served by sending it by post in a letter addressed to that person at his last or usual residence or place of business.

Regulations

26

• (1) The Commissioners may by regulations made by statutory instrument make provision for any matter for which it appears to them necessary to make provision for the purpose of enabling them to discharge their functions in relation to the tax, and in particular, but without prejudice to the generality of this provision—

• (a) for requiring persons registered under this Schedule to account for the tax payable by them by reference to such periods as may be prescribed by the regulations and to pay the tax due in respect of any such period within such time from the end of the period as may be so prescribed;

• (b) for the particulars to be contained in any notification under paragraph 15 of this Schedule;

• (c) for requiring persons registered under this Schedule to furnish to persons acquiring chargeable vehicles from them certificates in such form as may be prescribed by the regulations that the tax on the vehicles has been or will be paid;

• (d) for requiring persons not registered under this Schedule to furnish to persons acquiring chargeable vehicles from them statements in such form as may be prescribed by the regulations that the vehicles are chargeable vehicles on which tax will be payable;

• (e) for treating, for a limited time, as registered under this Schedule persons who carry on the business of persons so registered who have died or have become incapacitated;

• (f) for the issue by the Commissioners of certificates stating that the tax on any chargeable vehicle has been paid or remitted;

• (g) for specifying the circumstances in which a chargeable vehicle supplied by a person under an agreement for sale or return is to be treated for the purposes of the tax as ceasing to be his property in accordance with the agreement;

• (h) for any other matter for which, under this Schedule, provision may be made by regulations.

• (2) Without prejudice to the generality of the preceding sub-paragraph, the regulations may make special provision with respect to certificates and other documents to be issued for the purposes of the tax before the end of March 1973.

• (3) A statutory instrument made under this paragraph shall be subject to annulment in pursuance of a resolution of the Commons House of Parliament.

Restriction on registration of chargeable vehicles

27

Regulations made under section 23 of the Vehicles (Excise) Act 1971 may enable the Secretary of State to refuse to register a vehicle unless he is satisfied, by such evidence as may be prescribed by the regulations, either—

• (a) that the vehicle is not a chargeable vehicle; or

• (b) that the tax chargeable on it has been or will be paid; or

• (c) that tax on it has been remitted.

Isle of Man

28

• (1) If an Act of Tynwald makes provision similar to the provision made with respect to the car tax by this Act, Her Majesty may by Order in Council make provision for securing that—

• (a) tax is charged under either Act as if references therein to the United Kingdom or to the Isle of Man included both the United Kingdom and the Isle of Man, but is not charged under both Acts on the same vehicle;

• (b) persons who are registered under either this Schedule or that Act are treated as registered also under the other; and

• (c) the removal of a vehicle from the United Kingdom into the Isle of Man or from the Isle of Man into the United Kingdom is not treated for the purposes of either Act as an importation or exportation of the vehicle;

and for making such modifications in those Acts and regulations made thereunder as may be requisite for those purposes; and similarly with respect to any Act passed after this Act and relating to the car tax.