Finance (No. 2) Act 1975

Part I — Customs and Excise

Miscellaneous

Increase of duties on spirits, beer, wine, British wine and tobacco

1

Gaming licence duty

2

Bingo duty

3

Gaming machine licence duties

4

• (1) In section 23(1) of the Betting and Gaming Duties Act 1972 (duty on ordinary gaming machine licences)—

• (a) in Table A (premises with local authority approval) for " £75 " there shall be substituted " £50 ", and for " £150 " there shall be substituted " £100 "; and

• (b) in Table B (premises without local authority approval) for " £150 " there shall be substituted " £100 ", and for " £300 " there shall be substituted " £200 ".

• (2) In section 24(b) of that Act (duty on holiday season licences) for " £15 " there shall be substituted " £7.50 ".

• (3) In paragraph 2 of Schedule 4 to that Act (exemption for provision of gaming machines at pleasure fairs)—

• (a) in sub-paragraph (2)(b), for " l0p " (in both places) there shall be substituted " 15p ", and for " 25p " (in both places) there shall be substituted " 40p ";

• (b) in sub-paragraph (3)(a) and (b), for " 25p " (wherever occurring) there shall be substituted " 40p "; and

• (c) in sub-paragraph (4), for " l0p " there shall be substituted " 15p ".

• (4) In Part I of that Schedule there shall be inserted after paragraph 2—

(2A) (1) The Commissioners may by order made by statutory instrument provide that any provision of paragraph 2 of this Schedule which is specified in the order and which mentions a sum shall have effect, as from a date so specified, as if for that sum there were substituted such larger sum as may be specified in the order. (2) An order under this paragraph may be varied or revoked by a subsequent order. (3) Any statutory instrument containing an order under this paragraph shall be subject to annulment in pursuance of a resolution of the House of Commons.

• (5) In Part V of the Miscellaneous Transferred Excise Duties Act (Northern Ireland) 1972 (gaming machine licences in Northern Ireland)—

• (a) in the Table in section 44(4) (duty where rewards from machines exceed l0p) for " £150 " there shall be substituted " £100 ", and for " £300" there shall be substituted " £200 ";

• (b) in the Table in section 45(3) (duty where rewards do not exceed l0p) for " £75" there shall be substituted " £50 "; and

• (c) in section 45(5) (duty on eight-month licences) for " £15 " there shall be substituted " £7.50 ".

• (6) Subsections (1), (2) and (5) of this section shall have effect in relation to licences for periods beginning at any time after the end of September 1975 ; and subsection (3) shall be deemed to have had effect from the beginning of May 1975.

Vehicles excise duty: Great Britain

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

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

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

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

• (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Vehicles excise duty: Northern Ireland

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Continuation of powers under Finance Act 1961 s. 9

7

Conversion of revenue duties and related provisions taking effect on 1st January 1976

Conversion of certain revenue duties and amendment of customs and excise and other Acts in connection therewith

8

Spirits

9

Beer

10

• (1) There shall be charged on beer—

• (a) imported into the United Kingdom ; or

• (b) brewed in the United Kingdom,

a duty of excise at the rate of £13.6800 for every 36 gallons, that rate being, however, increased in the case of beer of an original gravity exceeding 1,030 degrees, by £0.4560 for each additional degree.

• (2) Drawback under sections 137 and 138 of the Act of 1952 shall, where it is shown to the satisfaction of the Commissioners that a duty of excise charged under this section has been paid, be allowed at the same rate as the rate at which the duty is charged; but as respects beer of an original gravity of less than 1,030 degrees the amount of drawback allowable shall not exceed the amount of the duty shown to the satisfaction of the Commissioners to have been paid.

Hydrocarbon oil

11

Matches

12

Mechanical lighters

13

• (1) There shall be charged on mechanical lighters—

• (a) imported into the United Kingdom ; or

• (b) manufactured in the United Kingdom and sent out from the premises of a manufacturer of mechanical lighters,

a duty of excise at the rate of £0.2000 for each lighter.

• (2) The duty chargeable under subsection (1) above shall be chargeable on mechanical lighters which when so imported or sent out are incomplete as well as on lighters which at that time are complete.

• (3) No duty shall be chargeable under subsection (1) above on a domestic gas lighter, that is to say, a mechanical lighter which is shown to the satisfaction of the Commissioners to be contracted solely for the purposes of igniting gas for domestic use.

Wine

14

Made-wine

15

• (1) There shall be charged on made-wine—

• (a) imported into the United Kingdom ; or

• (b) produced in the United Kingdom by a person who is required by subsection (2) below to be licensed to produce made-wine for sale,

a duty of excise at the rates shown in Schedule 5 to this Act and the duty shall, in so far as it is chargeable on made-wine produced in the United Kingdom, be charged and paid in accordance with regulations under section 140 of the Act of 1952 (as substituted by paragraph 27 of Schedule 3 to this Act).

• (2) Subject to subsections (3) and (4) below, a person who, on any premises in the United Kingdom, produces made-wine for sale must hold an excise licence under this subsection in respect of those premises for that purpose and on such a licence there shall be charged an excise duty at the rate of £5.25 per annum.

• (3) A person who, in warehouse, produces made-wine for sale by rendering it sparkling in accordance with regulations under section 16(2) of this Act need not hold an excise licence under subsection (2) above in respect of those premises.

• (4) A person need not hold an excise licence under subsection (2) above in respect of premises on which he produces made-wine for sale so long as all the following conditions are satisfied in relation to the production of made-wine by him on those premises, that is to say—

• (a) the excise duty chargeable on each alcoholic ingredient used by him has become payable before he uses it;

• (b) the ingredients he uses do not include non-excisable cider or black beer ;

• (c) he does not by fermentation increase the alcoholic strength of any liquor or substance used by him; and

• (d) he does not render any made-wine sparkling.

• (5) If any person who is required by subsection (2) above to hold a licence under that subsection in respect of any premises produces made-wine on those premises without being the holder of a licence under that subsection in respect of those premises he shall be liable to a penalty of £500 and the made-wine and all vessels, utensils and materials for producing made-wine found in his possession shall be liable to forfeiture.

• (6) In this section (and in the customs Acts and excise Acts)—

• " made-wine " means any liquor obtained from the alcoholic fermentation of any substance or by mixing a liquor so obtained or derived from a liquor so obtained with any other liquor or substance but does not include wine, beer, black beer, spirits or non-excisable cider;

• " non-excisable cider " means cider (or perry) of a strength less than 8-7 per cent, of alcohol by volume (at a temperature of 20°C) obtained from the fermentation of apple or pear juice without the addition at any time of any alcoholic liquor or of any liquor or substance which communicates colour or flavour other than such as the Commissioners may allow as appearing to them to be necessary to produce cider (or perry);

and, subject to any provision contained in Schedule 3 to this Act, in the excise Acts in force on 1st January 1976, for the expression " British wine " (substituted for " sweets " by section 1(4) of the Finance Act 1962) wherever occurring, there shall be substituted the expression " made-wine ".

Regulation of warehouses and warehoused goods

16

Part II

VAT: higher rate

17

VAT: conversion of certain goods

18

VAT: time of supply

19

• (1) In section 7 of the Finance Act 1972 (time of supply), after subsection (6) there shall be inserted as subsection (6A)—

(6A) The Commissioners may, at the request of a taxable person, by direction alter the time at which supplies made by him (or such supplies made by him as may be specified in the direction) are to be treated as taking place, either— (a) by directing those supplies to be treated as taking place— (i) at times or on dates determined by or by reference to the occurring of some event described in the direction ; or (ii) at times or on dates determined by or by reference to the time when some event so described would in the ordinary course of events occur, the resulting times or dates being in every case earlier than would otherwise apply; or (b) by directing that, notwithstanding subsections (5) and (6) of this section, those supplies shall (to the extent that they are not treated as taking place at the time mentioned in subsection (4) of this section) be treated as taking place— (i) at the beginning of the relevant working period (as defined in his case in and for the purposes of the direction); or (ii) at the end of the relevant working period (as so defined)

.

• (2) In section 7(8) of the Finance Act 1972 (Commissioners' power to make regulations about time of supply in certain cases), after the words " notwithstanding the preceding provisions of this section " there shall be inserted the words " other than subsection (6A) ".

• (3) Where there were in force immediately before 21st April 1975 arrangements between the Commissioners and any taxable person for supplies made by him (or such supplies made by him as were specified in the arrangements) to be treated as taking place at times or on dates which, had subsections (1) and (2) above been in force when the arrangements were made, could have been provided for by a direction under subsection (6A) of the said section 7, he shall be treated for the purposes of the said subsection (6A) as having requested the Commissioners to give a direction thereunder to the like effect, and the Commissioners may give a direction (or a general direction applying to cases of any class or description specified in the direction) accordingly.

• (4) Where a taxable person provides a document to himself which—

• (a) purports to be a tax invoice in respect of a supply of goods or services to him by another taxable person; and

• (b) is in accordance with regulations under section 30 of the Finance Act 1972 treated as the tax invoice required by the regulations to be provided by the supplier,

section 7(5) and (6) of the Finance Act 1972 (under which the time of supply depends on the issue of a tax invoice by the supplier) shall have effect in relation to that supply—

• (i) as if the provision of the document to himself by the first-mentioned taxable person were the issue by the supplier of a tax invoice in respect of the supply ; and

• (ii) as if any notice of election given or request made by the first-mentioned taxable person for the purposes of those provisions had been given or made by the supplier.

• (5) This section shall be deemed to have come into force on 21st April 1975.

VAT: power to alter rates

20

In section 9(3) of the Finance Act 1972 (which enables the Treasury to alter the rates of value added tax by not more than 20 per cent, thereof) for " 20 " there shall be substituted " 25 ".

VAT: gaming machines

21

• (1) Where a person plays a game of chance by means of a gaming machine, then for the purposes of value added tax (but without prejudice to subsection (2) below) the amount paid by him to play shall be treated as the consideration for a supply of services to him.

• (2) The value to be taken as the value of supplies made in the circumstances mentioned in subsection (1) above in any period shall be determined as if the consideration for the supplies were reduced by an amount equal to the amount (if any) received in that period by persons (other than the person making the supply and persons acting on his behalf) playing successfully.

• (3) The insertion of a token into a machine shall be treated for the purposes of subsection (1) above as the payment of an amount equal to that for which the token can be obtained ; and the receipt of a token by a person playing successfully shall be treated for the purposes of subsection (2) above—

• (a) if the token is of a kind used to play the machine, as the receipt of an amount equal to that for which such a token can be obtained ;

• (b) if the token is not of such a kind but can be exchanged for money, as the receipt of an amount equal to that for which it can be exchanged.

• (4) In this section—

• " game of chance " has the same meaning as in the Gaming Act 1968; and

• " gaming machine " means a machine in respect of which the following conditions are satisfied, namely— it is constructed or adapted for playing a game of chance by means of it; and a player pays to play the machine (except where he has an opportunity to play payment-free as the result of having previously played successfully), either by inserting a coin or token into the machine or in some other way ; and the element of chance in the game is provided by means of the machine.

• (5) This section shall come into force on 1st November 1975.

Car tax on caravans

22

Repayment of car tax on exported vehicles

23

• (1) In Schedule 7 to the Finance Act 1972 the following paragraph shall be substituted for paragraph 7 (which provides that car tax is not to be charged on certain unregistered vehicles which have been or are to be exported)—

(7) Where the Commissioners are satisfied that a vehicle— (a) has been exported and was not registered before it was exported, or (b) is to be exported under arrangements approved by them and is not registered, they shall remit the tax on the vehicle or, if the tax has been paid, repay it; but where such a vehicle is imported after having been exported the provisions of section 52 of this Act and of this Schedule shall apply in relation to it as they apply in relation to a vehicle made outside the United Kingdom and not previously imported.

• (2) In paragraph 8 of that Schedule (remission of tax on vehicles acquired for export)—

• (a) at the end of sub-paragraph (1) there shall be added the words " or, if the tax has been paid and the vehicle is unused, repay the tax ";

• (b) in sub-paragraph (2)—

• (i) after the words " has been remitted " there shall be inserted the words " or repaid ";

• (ii) for the words " on granting the remission directed" there shall be substituted the words " directed, as a condition of the remission or repayment, "; and

• (iii) after the words " but for the remission " there shall be inserted the words " or, as the case may be, an amount of tax equal to that repaid ".

Car tax: converted and adapted vehicles

24

In Schedule 7 to the Finance Act 1972 the following paragraph shall be substituted for paragraph 14 (converted and adapted vehicles)—

(14) (1) If it appears to the Commissioners that a person converts or adapts chargeable vehicles and that the vehicles so converted or adapted remain chargeable vehicles, they may direct that the conversion or adaptation shall, where it is of a description specified in the direction, be treated for the purposes of the tax as the making of the vehicles resulting from it, whether or not it would otherwise fall to be so treated. (2) A person in respect of whom a direction under this paragraph is in force shall be liable to be registered under this Schedule, whether or not he would otherwise be so liable. (3) Where a direction under this paragraph is in force in respect of any person, then, subject to such conditions as the Commissioners think necessary for the protection of the revenue and as are specified in the direction.— (a) tax shall not be charged on any unused vehicle delivered to that person, under arrangements approved by the Commissioners, by a person registered under this Schedule ; and (b) the wholesale value of any used vehicle which has been converted or adapted shall be taken to be reduced by an amount equal to what would have been its wholesale value if it had not been converted or adapted.

Part III — Income Tax, Corporation Tax and Capital Gains Tax

CHAPTER I — General

Charge of income tax for 1975-76

25

Charge of corporation tax for financial year 1974

26

Corporation tax shall be charged for the financial year 1974 at the rate of 52 per cent.

Corporation tax: other rates and fractions

27

• (1) The fraction by which, under section 93(2) of the Finance Act 1972, chargeable gains are to be reduced before they are for the purposes of corporation tax included in the profits of an authorised unit trust or investment trust shall, as from 1st April 1974, be seventy-one one-hundred-and-fourths (instead of the fraction specified in section 10(1)(b) of the Finance Act 1974).

• (2) The small companies rate for the financial year 1974 shall be 42 per cent, and for that year the fraction mentioned in section 95(2) of the Finance Act 1972 (marginal relief for small companies) shall be one-sixth.

Rate of advance corporation tax for financial year 1975

28

The rate of advance corporation tax for the financial year 1975 shall be thirty-five sixty-fifths.

Relief for interest: limit for 1975-76

29

In paragraph 5(1) of Schedule 1 to the Finance Act 1974 (limit on relief for interest on certain loans for purchase or improvement of land used as an only or main residence) the references to £25,000 shall have effect for the year 1975-76 as well as for the year 1974-75.

Alteration of personal reliefs

30

• (1) In section 8 of the Taxes Act (personal relief)—

• (a) for the reference in subsection (1)(a) (married) to £865 there shall be substituted a reference to £955 ; and

• (b) for the references in subsection (1)(b) (single) and (2) (wife's earned income) to £625 there shall be substituted references to £675.

• (2) In section 14 of the Taxes Act (additional relief for widows and others in respect of children) for the references to £180 there shall be substituted references to £280.

• (3) In section 18 of the Taxes Act (relief for blind persons)—

• (a) for any reference to £100 or £130 there shall be substituted a reference to £180; and

• (b) for any reference to £200 or £260 there shall be substituted a reference to £360.

Age allowance

31

• (1) After subsection (1) of section 8 of the Taxes Act there shall be inserted the following subsections—

(1A) Subject to subsection (1B) below, subsection (1) above shall have effect— (a) in relation to a claim by a person who proves that he or his wife was at any time within the year of assessment of the age of sixty-five or upwards, as if the sum specified in paragraph (a) were £1,425 ; and (b) in relation to a claim by a person who proves that he was at any time within the year of assessment of the age of sixty-five or upwards, as if the sum specified in paragraph (b) were £950. (1B) Where the claimant's total income for the year of assessment exceeds £3,000, subsection (1A) above shall not apply except in a case where the deduction to be allowed under subsection (1) above will be increased by virtue of this subsection; and in such a case shall apply as if the sums mentioned in it were reduced by two-thirds of the excess of that total income over £3,000.

• (2) Section 7 of the Taxes Act shall cease to have effect.

• (3) In section 5 of the Taxes Act for the words " sections 7 to 21 " there shall be substituted the words " sections 8 to 21 ".

• (4) In section 34(3) of the Finance Act 1971 for the reference to section 7 of the Taxes Act there shall be substituted a reference to section 8(1B) of that Act.

• (5) In paragraph 3(3) of Schedule 4 to the Finance Act 1971 for the reference to section 7 of the Taxes Act there shall be substituted a reference to section 8(1A) of that Act.

Interim benefit for unmarried or separated parents with children

32

For the purposes of the Income Tax Acts payments of benefit under section 16 of the Child Benefit Act 1975 (interim benefit for unmarried or separated parents with children) or any corresponding provision having effect in Northern Ireland shall be deemed to be payments on account of allowances under the Family Allowances Act 1965 or the Family Allowances Act (Northern Ireland) 1966, as the case may be.

Exemption of non-contributory invalidity pension

33

In section 219(1)(a) of the Taxes Act (which, as amended by Schedule 2 to the Social Security (Consequential Provisions) Act 1975, charges to income tax benefits under certain provisions of the Social Security Act 1975 or the Social Security (Northern Ireland) Act 1975 except unemployment benefit, sickness benefit, invalidity benefit, attendance allowance, maternity benefit and death grant), after the words " attendance allowance " there shall be inserted the words " non-contributory invalidity pension, ".

Stock dividends

34

• (1) Subject to subsections (9) to (11) below, this section applies to the following share capital, that is to say—

• (a) any share capital issued by a company resident in the United Kingdom in consequence of the exercise by any person of an option conferred on him to receive in respect of shares in the company (whether the last-mentioned shares were issued before or after the coming into force of this section) either a dividend in cash or additional share capital; and

• (b) any bonus share capital issued by a company so resident in respect of any shares in the company of a relevant class (whether the last-mentioned shares were issued before or after the coming into force of this section).

• (2) For the purposes of subsection (1)(b) above a class of shares is a relevant class if—

• (a) shares of that class carry the right to receive bonus share capital in the company of the same or a different class ; and

• (b) that right is conferred by the terms on which shares of that class were originally issued or by those terms as subsequently extended or otherwise varied.

• (3) Where a company issues any share capital to which this section applies in a case in which two or more persons are entitled thereto, the following provisions of this section and paragraph 3 of Schedule 8 to this Act shall have effect as if the company had issued to each of those persons separately a part of that share capital proportionate to his interest therein on the due date of issue.

• (4) Subject to the following provisions of this section, where a company issues any share capital to which this section applies in a case in which an individual is beneficially entitled to that share capital, that individual shall be treated as having received on the due date of issue income of an amount which, if reduced by an amount equal to income tax thereon at the basic rate for the year of assessment in which that date fell, would be equal to the appropriate amount in cash (as defined in paragraph 1 of Schedule 8 to this Act), and—

• (a) no assessment shall be made on the individual in respect of income tax at the basic rate on the said income but he shall be treated as having paid tax at the basic rate on it or, if his total income is reduced by any deductions, on so much of the said income as is part of his total income as so reduced ;

• (b) no repayment shall be made of income tax treated by virtue of paragraph (a) above as having been paid; and

• (c) the said income shall be treated for the purposes of sections 52 and 53 of the Taxes Act as not brought into charge to income tax.

• (5) Where a company issues any share capital to which this section applies to the personal representatives of a deceased person as such during the administration period, the amount of income which, if the case had been one in which an individual was beneficially entitled to that share capital, that individual would have been treated under subsection (4) above as having received shall be deemed for the purposes of Part XV of the Taxes Act to be part of the aggregate income of the estate of the deceased.

The preceding provisions of this subsection shall be construed as if contained in Part XV of the Taxes Act; and in section 432(7) of that Act there shall be added at the end the words " and section 34(5) of the Finance (No. 2) Act 1975 (stock dividends) ".

• (6) Where a company issues any share capital to which this section applies to trustees in respect of any shares in the company held by them (or by them and one or more other persons) in a case in which a dividend in cash paid to the trustees in respect of those shares would have been to any extent income to which section 16 of the Finance Act 1973 (charge to additional rate of certain income of discretionary trusts) applies, then—

• (a) there shall be ascertained the amount of income which. if the case had been one in which an individual was beneficially entitled to that share capital, that individual would have been treated under subsection (4) above as having received; and

• (b) income of that amount shall be treated as having arisen to the trustees on the due date of issue and as if it had been chargeable to income tax at the basic rate ; and

• (c) paragraphs (a) to (c) of subsection (4) above shall, with the substitution of " income " for " total income " and all other necessary modifications, apply to that income as they apply to income which an individual is treated as having received under that subsection.

In section 17(3)(b) of the Finance Act 1973 (amounts to be set off in connection with payments under discretionary trusts) after " above " there shall be inserted " or under section 34(6) of the Finance (No. 2) Act 1975 ".

• (7) Schedule 8 to this Act shall have effect for supplementing this section, which is there referred to as the principal section.

• (8) For the purposes of this section and Schedule 8 to this Act—

• (a) " bonus share capital ", in relation to a company, means share capital issued by the company otherwise than wholly for new consideration or such part of any share capital so issued as is not properly referable to new consideration;

• (b) " the due date of issue ", in relation to any share capital issued by a company, means the earliest date on which the company was required to issue that share capital;

• (c) an option to receive either a dividend in cash or additional share capital is conferred on a person not only where he is required to choose one or the other, but also where he is offered the one subject to a right, however expressed, to choose the other instead, and a person's abandonment of, or failure to exercise, such a right is to be treated as an exercise of the option ; and

• (d) section 237 of the Taxes Act (supplemental provisions about company distributions), excluding the proviso in subsection (1) and subsections (5) and (6), shall apply as it applies for the purposes of Part X of the Taxes Act.

• (9) This section shall be deemed to have come into force on 6th April 1975, but shall not apply to—

• (a) any share capital issued by a company which falls with in subsection (1)(a) or (b) above but of which the due date of issue preceded that date ; or

• (b) any share capital issued by a company in respect of shares in the company which confer on the holder a right to convert or exchange them into or for shares in the company of a class which is not a relevant class for the purposes of subsection (1)(b) above where the due date of issue of the share capital so issued precedes the earlier of the following dates, namely—

• (i) the day next after the earliest date after 5th August 1975 on which conversion or exchange of the shares could be effected by an exercise of that right; and

• (ii) 6th April 1976 or, in the case of share capital issued by an investment trust (within the meaning of Chapter VI of Part XII of the Taxes Act), 6th April 1977.

• (10) Where, in a case within subsection (4) above, the share capital in question is issued in respect of shares in the company issued before 6th April 1975 which confer on the holder a right to convert or exchange them into or for shares in the company of a different class, this section shall not apply to so much (if any) of any bonus share capital issued by the company after 5th April 1976 in connection with an exercise of that right as would have been issued if that right had been exercised so as to effect the conversion or exchange of the shares on the earliest possible date after 5th April 1975; and subsections (5) and (6) above shall, where applicable, have effect accordingly.

• (11) Where any bonus share capital falling within subsection (1)(b) above (whether issued before or after the coming into force of this section) is after 5th April 1975 converted into or exchanged for shares in the company in question of a different class, then—

• (a) this section shall not apply to any shares in the company issued, in connection with the conversion or exchange, in consideration of the cancellation, extinguishment or acquisition by the company of that bonus share capital; but

• (b) sub-paragraphs (a) and (b) of paragraph 6 of Schedule 8 to this Act shall apply to any shares in the company issued, in connection with the conversion or exchange, in consideration of the cancellation, extinguishment or acquisition by the company of so much of that bonus share capital as caused an individual to be treated under subsection (4) above as having received an amount of income on the due date of issue (or would have done so if the case had been one in which an individual was beneficially entitled to that share capital).

Benefits in kind: insurance against cost of medical treatment

35

• (1) Where a person incurs expense in or in connection with the provision for any employee, by reason of his employment, of insurance against the cost of medical treatment in circumstances such that section 196(1) of the Taxes Act (benefits in kind to be taken into account) would not, apart from this section, apply to the expense (whether because of the rate of the employee's emoluments or for any other reason), then, irrespective of the rate of those emoluments, Chapter II of Part VIII of the Taxes Act (expenses allowances to directors and others) shall have effect in relation to the expense as if—

• (a) the employee (if not so employed) were employed by the person incurring the expense in an employment to which that Chapter applies; and

• (b) section 201 (exclusion of charities and non-trading bodies) were omitted.

• (2) Where expense in or in connection with the provision of insurance against the cost of medical treatment is incurred by a person in respect of two or more employees as members of a group or class, then, for the purposes of subsection (1) above and of Chapter II of Part VIII of the Taxes Act in its application (whether or not by virtue of that subsection) to that expense, the expense incurred in respect of any one of those employees shall be taken to be such part of that expense as is just and reasonable.

• (3) Notwithstanding anything in this section or Chapter II of Part VIII of the Taxes Act, that Chapter shall not apply in relation to expense incurred wholly in or in connection with the provision for an employee of insurance against the cost of medical treatment outside the United Kingdom the need for which arises while he is outside the United Kingdom for the purpose of performing the duties of his employment.

• (4) For the purposes of this section—

• (a) " employee " means the holder of any office or employment such that any emoluments thereof would fall to be assessed under Schedule E, and related expressions shall be construed accordingly ;

• (b) medical treatment includes all forms of treatment for, and all procedures for diagnosing, any physical or mental ailment, infirmity or defect, and the cost of medical treatment includes the cost of being an inpatient, whether or not in a private room, for the purpose of medical treatment;

• (c) any such provision as is mentioned in subsection (1) above which is made for an employee by his employer shall be deemed to be made for the employee by reason of his employment; and

• (d) any reference to the provision of insurance for an employee includes a reference to the provision of it for the spouse or family of that employee.

• (5) This section has effect for the year 1976-77 and subsequent years of assessment.

Benefits in kind: vouchers other than cash vouchers

36

• (1) Subject to subsection (2) below, where a voucher provided for an employee by reason of his employment is received by the employee, then, for the purposes of the Income Tax Acts—

• (a) he shall be treated as having received in the relevant year of assessment an emolument from his employment of an amount equal to the expense incurred by the person providing the voucher in or in connection with the provision of the voucher and the money, goods or services for which it is capable of being exchanged; and

• (b) any money, goods or services obtained by the employee or any other person in exchange for the voucher shall be disregarded.

For the purposes of this subsection the relevant year of assessment, in relation to a voucher, is the one in which the said expense is- incurred by the person providing the voucher or, if different and later, the one in which the voucher is received by the employee.

• (2) Where a voucher provided for an employee by reason of his employment is exchanged by him for goods or services such that, if he had purchased those goods or services for money, the money expended by him would have qualified for relief under section 189 of the Taxes Act (relief for necessary expenses), subsection (1) above shall not apply in relation to that voucher.

• (3) Where a voucher provided for an employee by reason of his employment is appropriated to him (whether by attaching it to a card held for him or in any other way), subsection (1) above shall have effect as if the employee had received the voucher at the time when it was so appropriated.

• (4) In this section " voucher " does not include a cash voucher within the meaning of section 37 of this Act but, subject to that, means any voucher, stamp or similar document capable of being exchanged (whether singly or together with other such vouchers, stamps or documents, and whether immediately or only after a time) for money, goods or services (or for any combination of two or more of those things).

• (5) For the purposes of this section—

• (a) " employee " and related expressions have the meaning given by section 35(4)(a) of this Act;

• (b) where a person incurs expense in or in connection with the provision by him of vouchers for two or more employees as members of a group or class, the expense incurred in respect of any one of them shall be taken to be such part of that expense as is just and reasonable;

• (c) a voucher provided for an employee by his employer shall be deemed to be provided for him by reason of his employment; and

• (d) any reference to a voucher being provided for or received by an employee includes a reference to it being provided for or received by the spouse or family of that employee.

• (6) This section has effect for the year 1976-77 and subsequent years of assessment.

Benefits in kind: cash vouchers to be taxed under P.A.Y.E

37

• (1) Where a cash voucher provided for an employee by reason of his employment is received by the employee, then, subject to subsection (5) below, for the purposes of the Income Tax Acts (and in particular section 204(1) of the Taxes Act (pay as you earn))—

• (a) he shall be treated as being paid by his employer, at the time when he receives the voucher, an emolument of his employment of an amount equal to the sum of money for which the voucher is capable of being exchanged as mentioned in subsection (3) below; and

• (b) any money obtained by the employee or any other person in exchange for the voucher shall be disregarded.

• (2) Where a cash voucher provided for an employee by reason of his employment is appropriated to him (whether by attaching it to a card held for him or in any other way), subsection (1) above and subsection (5) below shall have effect as if the employee had received the voucher at the time when it was so appropriated.

• (3) In this section "cash voucher" (subject to subsection (4) below) means any voucher, stamp or similar document capable of being exchanged (whether singly or together with other such vouchers, stamps or documents, and whether immediately or only after a time) for a sum of money greater than, equal to or not substantially less than the expense incurred in providing the voucher by the person who provides it (whether or not it is also capable of being exchanged for goods or services), except that it does not include—

• (a) any document intended to enable a person to obtain payment of the sum mentioned in the document, being a sum which if paid to him directly would not have been chargeable to income tax under Schedule E; or

• (b) a savings certificate the accumulated interest payable in respect of which is exempt from tax (or would be so exempt if certain conditions were satisfied).

• (4) Where a voucher, stamp or similar document is capable of being exchanged (as aforesaid) for a sum of money substantially less than the expense incurred in providing the voucher by the person who provides it, and the difference or part of the difference represents the cost to that person of providing benefits in connection with sickness, personal injury or death, then in determining whether the voucher, stamp or document is a cash voucher within the meaning of this section the expense incurred by him in providing it shall be treated as reduced by that difference or part.

• (5) Subsection (1) above shall not apply to a cash voucher received by an employee if, at the time when the voucher is received, the scheme under which it was issued is a scheme approved by the Board for the purposes of this subsection ; and the Board shall not approve a scheme for those purposes unless satisfied that it is practicable for income tax to be deducted in accordance with regulations under section 204 of the Taxes Act from all payments made in exchange for vouchers issued under the scheme.

• (6) Subsection (5)(a), (c) and (d) and subsection (6) of section 36 of this Act shall apply for the purposes of this section (the references in the said subsection (5)(c) and (d) to a voucher being for this purpose read as references to a cash voucher).

Workers supplied by agencies

38

• (1) Subject to the provisions of this section, where—

• (a) an individual (in this section called " the worker") renders or is under an obligation to render personal services to another person (in this section called " the client") and is subject to, or to the right of, supervision, direction or control as to the manner in which he renders those services ; and

• (b) the worker is supplied to the client by or through a third person (in this section called " the agency "), and renders or is under an obligation to render those services under the terms of a contract between the worker and the agency (in this section called " the relevant contract"); and

• (c) remuneration receivable under or in consequence of that contract would not, apart from this section, be chargeable to income tax under Schedule E,

then, for all the purposes of the Income Tax Acts, the services which the worker renders or is under an obligation to render to the client under that contract shall be treated as if they were the duties of an office or employment held by the worker, and all remuneration receivable under or in consequence of that contract shall be treated as emoluments of that office or employment and shall be assessable to income tax under Schedule E accordingly.

• (2) Subsection (1)(b) above includes cases in which the third person is an unincorporated body of which the worker is a member.

• (3) Subsection (1) above shall apply whether or not the worker renders or is under an obligation to render the services in question as a partner in a firm or member of an unincorporated body; and where, in any case in which that subsection applies, the worker is a partner in a firm or a member of such a body, remuneration receivable under or in consequence of the relevant contract shall be treated for all the purposes of the Income Tax Acts as income of the worker and not as income of the firm or body.

• (4) For the purposes of this section any remuneration which the client pays or provides by reason of the worker being a person who renders or is under an obligation to render the services in question shall be treated as receivable in consequence of the relevant contract.

• (5) Subsection (1) above shall not apply—

• (a) if the services in question are services as an actor, singer, musician or other entertainer or as a fashion, photographic or artist's model; or

• (b) if the services in question are rendered wholly in the worker's own home or at other premises which are neither under the control or management of the client nor premises at which the worker is required, by reason of the nature of the services, to render them ; or

• (c) if in rendering the services the worker is or would be a sub-contractor within the meaning of section 69(2) of this Act.

• (6) Where an individual enters into arrangements with another person with a view to the rendering of personal services by the individual, being arrangements such that, if and when he renders any such services as a result of the arrangements, those services will be treated under subsection (1) above as if they were the duties of an office or employment held by him, then for all purposes of the Income Tax Acts any remuneration receivable under or in consequence of the arrangements shall be treated as emoluments of an office or employment held by the individual and shall be assessable to income tax under Schedule E accordingly.

• (7) Where—

• (a) any services which an individual renders or is under an obligation to render under a contract are treated under subsection (1) above as the duties of an office or employment held by him ; or

• (b) any remuneration receivable under or in consequence of arrangements to which subsection (6) above applies is treated under that subsection as emoluments of an office or employment held by an individual,

section 15 of the Taxes Management Act 1970 (return of employees etc.) shall apply as if that individual were employed—

• (i) in a case within paragraph to) above, by the person or each of the persons from whom he receives any remuneration under or in consequence of the contract; and

• (ii) in a case within paragraph (b) above, by the other party to the arrangements,

and section 16 of that Act (return of payments made to persons other than employees) shall not apply to any payments made to that individual under or in consequence of that contract or under those arrangements.

• (8) In this section " remuneration ", in relation to an individual, does not include anything in respect of which he would not have been chargeable to tax under Schedule E if it had been receivable in connection with an office or employment held by him but, subject to that, includes every form of payment and all perquisites, benefits and profits whatsoever.

• (9) The preceding provisions of this section shall have effect for the year 1976-77 and subsequent years of assessment.

• (10) In assessing to income tax under Case I or Case II of Schedule D any profits or gains arising or accruing in the year 1975-76 or any earlier year of assessment from any trade, profession or vocation not permanently discontinued before 6th April 1976, being profits or gains which, if subsections (1) to (8) above had had effect for that year, would have been assessable to tax under Schedule E, the trade, profession or vocation shall be treated for all the purposes of the Income Tax Acts as having been permanently discontinued on 5th April 1976:

Provided that where only part of those profits or gains would, if those subsections had had effect for that year, have been assessable to tax under Schedule E, that part shall be treated as arising or accruing from a separate trade, profession or vocation, and only that separate trade, profession or vocation shall be treated under this subsection as having been permanently discontinued as aforesaid.

Increase in deductions to be made from payments to subcontractors in the construction industry

39

Section 29 of the Finance Act 1971 (which requires deductions to be made from payments to certain sub-contractors in the construction industry) shall have effect in relation to payments made on or after 1st September 1975 with the substitution in subsection (4) (amount of deduction) for " 30 per cent. " of " 35 per cent.".

Amendment of Finance Act 1975, Schedule 2, paragraph 19

40

At the beginning of sub-paragraph (1) of paragraph 19 of Schedule 2 to the Finance Act 1975 there shall be inserted the words " Subject to sub-paragraph (1A) below " and after that sub-paragraph there shall be inserted the following sub-paragraph :

(1A) Except where the deficiency mentioned in sub-paragraph (1) above occurs in connection with a contract for a life annuity made after 26th March 1974, the deduction allowable under that sub-paragraph shall be made only for the purpose of ascertaining the individual's excess liability, that is to say, the excess (if any) of his liability to income tax over what it would be if all income tax were chargeable at the basic rate to the exclusion of any other rate.

.

Securities bought with borrowed money

41

In relation to interest paid or income arising after 29th April 1975 section 76(3) of the Finance Act 1972 (securities bought with borrowed money where borrower is a close company which is not a trading company) shall have effect with the omission of the words " which is not a trading company " and with the addition, at the end, of the following proviso—

Provided that subsection (2) above shall not by virtue of this subsection apply— (a) in the case of a debt or liability incurred by a close company in connection with the acquisition by it of any securities, or an interest in any securities, if the proceeds accruing to the company from the redemption of the securities, or from a disposal of them or of the interest in them, are treated as a receipt of its trade ; or (b) in the case of a debt or liability incurred by a close company in connection with the acquisition by it of Treasury Bills.

Insurance companies: effect for tax purposes of identification or exchange of long term assets

42

• (1) The provisions of this section apply to any insurance company which carries on or has carried on long term business, and shall have effect for all purposes of the Corporation Tax Acts.

• (2) A profit or loss shall not be taken to have arisen in respect of any asset of the company by reason only that—

• (a) the asset has at any time on or after the base date been identified under arrangements made for the purposes of section 23(3) of the Insurance Companies Act 1974 as attributable to the company's long term business; or

• (b) the asset is not among the assets of the company which have at any time on or after that date been identified under those arrangements as so attributable.

• (3) Subject to subsection (5) below, a profit or loss shall not be taken to arise in respect of any asset of the company by reason only that at any time after the base date the asset was or is exchanged for other assets of the company so as to become or cease to be part of the long term assets.

• (4) Subject to subsection (6) below, if an asset of the company which has at any time after 29th April 1975 been exchanged as mentioned in subsection (3) above is—

• (a) within the period of one year beginning with the date of that exchange ("the relevant exchange") exchanged again for other assets of the company so as to cease to be or, as the case may be, become part of the long term assets; or

• (b) within the period of six months beginning with the date of the relevant exchange disposed of by the company,

then any income arising in respect of the asset after the relevant exchange, and any profit, gain or loss accruing to the company on a disposal of the asset made after the relevant exchange, shall be treated as if the relevant exchange had not taken place.

• (5) If an insurance company to which this section applies by notice in writing given to the inspector so elects, then, where in the relevant period any relevant asset of the company was or is exchanged as mentioned in subsection (3) above—

• (a) that subsection shall not apply in relation to that asset as regards that exchange ; and

• (b) the company shall be treated as if the asset had been disposed of at market value by the company at the time of the exchange.

In this and the following subsection—

• " the relevant period ", in relation to a notice under this subsection, means the period of six years from the end of the accounting period of the company in which the notice is given or, if the notice is given within one year after the passing of this Act and so requires, the period beginning with the day after the base date and ending six years after the end of the accounting period of the company in which the day after the base date fell;

• " relevant asset ", in relation to an insurance company, means an asset of the company such that, if it were sold, the proceeds would be taken into account in any computation of profits of the company in accordance with the provisions of the Taxes Act applicable to Case I of Schedule D.

• (6) Where an insurance company has given a notice under subsection (5) above, subsection (4) above shall, as regards relevant assets disposed of by the company in the relevant period, have effect as if paragraph (b) and the reference to any profit, gain or loss accruing to the company on a disposal made after the relevant exchange were omitted.

• (7) If at any time after the base date an insurance company to which this section applies disposed or disposes of an asset which—

• (a) was or is part of the long term assets at the time of the disposal, but without having been continuously part of those assets since its acquisition by the company; or

• (b) was or is not part of the long term assets at the time of the disposal, but without having been continuously not part of those assets since its acquisition by the company,

the asset shall be treated, in a case falling within paragraph (a) above, as if it had been continuously part of the long term assets from the time of its acquisition by the company to the time of the disposal, or, in a case falling within paragraph (b) above, as if it had been continuously not part of the long term assets from the time of its acquisition by the company to the time of its disposal; and if the disposal is one as respects which subsection (4) above applies, this subsection shall apply as if the relevant exchange (within the meaning of that subsection) had not taken place.

• (8) Without prejudice to the preceding subsection, if—

• (a) an insurance company to which this section applies disposes of an asset which, since its acquisition by the company, has on one or more occasions (whether after the base date or not) been exchanged for other assets of the company ; and

• (b) as regards that occasion or one or more of those occasions the company was assessed to income tax or corporation tax in an amount computed by reference to the value of the asset at the time of the exchange,

then, in computing for any purpose of the Corporation Tax Acts the profit, gain or loss (if any) arising on the disposal, the asset shall be deemed to have been acquired by the company on the occasion or latest of the occasions mentioned in paragraph (b) above at a cost equal to the value by reference to which the company was so assessed as regards that occasion.

• (9) There shall be made such assessments, reductions of assessments or, on a claim in that behalf, repayments of tax as may in any case be required in order to give effect to subsection (4) or (5) above.

• (10) In this section, unless the context otherwise requires, " asset" includes part of an asset and any reference to a disposal of part of an asset includes a reference to a part disposal of an asset within the meaning of section 22(2)(b) of the Finance Act 1965 ; and where a part of an asset is exchanged or disposed of as mentioned in any of subsections (3) to (8) above, that subsection shall have effect as if that part of the asset and the part not exchanged or disposed of were separate assets.

• (11) For the purposes of this section—

• " the base date ", in relation to an insurance company, means the last day of the financial year of the company which ended next after 7th December 1973 ;

• " financial year " has the same meaning as it has for the purposes of the Insurance Companies Act 1974 or, in Northern Ireland, the Insurance Companies Act (Northern Ireland) 1968;

• " insurance company " means a company to which Part II of the Insurance Companies Act 1974 or the Insurance Companies Act (Northern Ireland) 1968 applies;

• " long term assets ", in relation to an insurance company, means assets representing the fund or funds maintained by the company in respect of its long term business ;

• " long term business " has the meaning given by section 1(2) of the Insurance Companies Act 1974 or, in Northern Ireland, section 72 of the Insurance Companies Act (Northern Ireland) 1968.

• (12) In relation to any time before 31st August 1974, and in its application to Northern Ireland on or after that date, subsection (2) above shall have effect as if the reference to section 23(3) of the Insurance Companies Act 1974 were a reference to section 7(3) of the Insurance Companies Amendment Act 1973.

Oil: restriction on carrying forward of losses incurred before the end of 1972

43

• (1) In the case of an oil company, as defined in this section, section 177(1) of the Taxes Act (carrying forward of losses) shall have effect subject to the provisions of this section; and in those provisions " the material time " means the end of the year 1972, and references to losses being set off are references to their being set off under the said section 177(1).

• (2) Of the losses which the company incurred before the material time in its trade (other than losses excepted by subsection (5) below)—

• (a) none shall be capable of being set off against trading income to which this paragraph applies; and

• (b) the amount capable of being set off against other trading income arising after that time from the trade shall not exceed whichever of the amounts mentioned in subsection (4) below is the greater.

• (3) Subsection (2) (a) above applies to the following trading income, that is to say—

• (a) trading income arising after the material time from the separate trade consisting of activities falling within paragraph (a) or (b) of section 13(1) of the Oil Taxation Act 1975 (treatment of oil extraction activities etc. as a separate trade); and

• (b) trading income which would fall within the preceding paragraph if in section 13(6) of that Act, so far as it relates to the operation of the said section 13(1), for the references to 11th July 1974 there were substituted references to 31st December 1972.

• (4) The amounts referred to in subsection (2)(b) above are—

• (a) the total amount of relevant trading income arising in the period beginning with 1st January 1973 and ending with 11th July 1974 ; and

• (b) £50 million;

and in this subsection " relevant trading income " means trading income arising from the trade in which the losses mentioned in subsection (2) above were incurred, exclusive of trading income to which paragraph (a) of that subsection applies.

• (5) There shall be excepted from the operation of subsection (2) above any losses which, if section 13(1) of the Oil Taxation Act 1975 had had effect as regards the chargeable period in which they were incurred, would have been treated as incurred in the separate trade consisting of activities falling within paragraph (a) or (b) of the said section 13(1).

• (6) For the purposes of this section a company is an oil company if at the material time it carried on a trade the activities of which, at any time within the period of five years ending with the material time, included the acquisition, in the circumstances mentioned in paragraph (a) or (b) of subsection (7) below, of crude oil or the acquisition, in the circumstances mentioned in paragraph (c) of that subsection, of oil products, in substantial quantities.

• (7) The circumstances referred to in subsection (6) above are that—

• (a) the oil was extracted under rights exercisable by one or more companies associated with the company; or

• (b) the oil was extracted under rights exercisable by another company and not less than 20 per cent, of that other company's ordinary share capital was owned directly or indirectly by one or more of the following, that is to say, the company and companies associated with it; or

• (c) the oil products were acquired from one or more companies associated with the company and not resident in the United Kingdom, and the company was, at the time of the acquisition, associated with a company having rights to extract oil or with a company which (without regard to this paragraph) is or would but for subsection (8) below be an oil company.

• (8) In relation to a company not resident in the United Kingdom references in this section to activities of a trade carried on by the company are only to activities carried on through a branch or agency in the United Kingdom.

• (9) For the purposes of this section—

• (a) two companies are associated with one another if one is under the control of the other or both are under the control of the same person or persons, and " control" has the meaning assigned to it by section 534 of the Taxes Act; and

• (b) any question whether ordinary share capital is owned by a company directly or indirectly shall be determined as for the purposes of section 532 of the Taxes Act; and

• (c) rights are exercisable by a company if they are exercisable by that company alone or jointly with another company or companies.

• (10) In this section—

• " oil " does not include coal or anything won or capable of being won under the authority of a licence granted under either the Petroleum (Production) Act 1934 or the Petroleum (Production) Act (Northern Ireland) 1964 but, subject to that, includes any mineral oil or relative hydrocarbon;

• " oil products " means products which are derived from oil and are wholly or substantially of a hydrocarbon nature;

• " crude ", where the reference is to the acquisition of crude oil, refers to its acquisition without having been refined, and for the purposes of this definition refining does not include the subjecting of oil to any process of which the purpose is to enable it to be safely stored, safely loaded into a tanker or safely accepted by an oil refinery.

Payment of tax: general

44

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

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

• (5) In section 29(5) of the Taxes Management Act 1970 (notice of assessment), after the words “shall state” there shall be inserted the words “ the date on which it is issued and ”.

• (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (7) This section and sections 45 and 46 below shall not have effect in relation to tax charged by assessments notice of which was issued before the passing of this Act.

Payment of tax pending appeal

45

• (1) For section 55 of the Taxes Management Act 1970 (recovery of tax not in dispute) there shall be substituted—

(55) (1) This section applies to an appeal to the Commissioners against— (a) an assessment to income tax under Schedule A, Schedule C or Schedule D, (b) an assessment charging income tax at a rate other than the basic rate on income from which income tax has been deducted (otherwise than under section 204 of the principal Act) or from or on which income tax is treated as having been deducted or paid or income chargeable under Schedule F, (c) an assessment to income tax made under Schedule 20 to the Finance Act 1972 (income tax on company payments) other than an assessment charging tax the time for the payment of which is given by paragraph 4(1) or 9 of that Schedule, (d) an assessment to capital gains tax, (e) an assessment to corporation tax other than an assessment made under Schedule 14 to the Finance Act 1972 (advance corporation tax) charging tax the time for the payment of which is given by paragraph 3(1) or 9 of that Schedule. (2) If no application is made under subsection (3) below, the tax charged by the assessment shall be due and payable as if it were charged by an assessment in respect of which no appeal was pending. (3) If the appellant has grounds for believing that he is overcharged to tax by the assessment, he may, by notice in writing given to the inspector within thirty days after the date of the issue of the notice of assessment, apply to the Commissioners for a determination of the amount of tax the payment of which should be postponed pending the determination of the appeal. A notice of application under this subsection shall state the amount in which the appelant believes that he is overcharged to tax and his grounds for that belief. (4) If, after any determination of the amount of tax the payment of which should be so postponed, there is a change in the circumstances of the case as a result of which either party has grounds for believing that the amount so determined has become excessive or, as the case may be, insufficient, he may, by notice in writing given to the other party at any time before the determination of the appeal, apply to the Commissioners for a further determination of that amount. A notice of application under this subsection shall state the amount in which the applicant believes that the amount previously determined has become excessive or, as the case may be, insufficient and his grounds for that belief. (5) An application under subsection (3) or (4) above shall be heard and determined in the same way as the appeal ; and where any such application is heard and determined by any Commissioners, that shall not preclude them from hearing and determining the appeal or any application or further application under subsection (4) above. (6) The amount of tax the payment of which shall be postponed pending the determination of the appeal shall be the amount (if any) in which it appears to the Commissioners, having regard to the representations made and any lawful evidence adduced, that there are reasonable grounds for believing that the appelant is overcharged to tax ; and (a) in the case of a determination made on an application under subsection (3) above, any tax the payment of which is not so postponed shall be due and payable as if it were tax charged by an assessment notice of which was issued on the date of that determination and in respect of which no appeal was pending ; and (b) in the case of a determination made on an application under subsection (4) above, any tax the payment of which ceases to be so postponed shall be due and payable as if it were tax charged by an assessment notice of which was issued on the date of that determination and in respect of which no appeal was pending, or any tax overpaid shall be repaid, as the case may require. (7) If the appellant and the inspector come to an agreement, whether in writing or otherwise, as to the amount of tax the payment of which should be postponed pending the determination of the appeal, the like consequences shall ensue as would have ensued if the Commissioners had made a determination to that effect under subsection (6) above on the date when the agreement was come to, but without prejudice to the making of a further agreement or of a further determination under that subsection. (8) Where an agreement is not in writing— (a) subsection (7) above shall not apply unless the fact that an agreement was come to, and the terms agreed, are confirmed by notice in writing given by the inspector to the appellant or by the appellant to the inspector, and (b) the reference in that subsection to the time when the agreement was come to shall be construed as a reference to the time of the giving of the notice of confirmation. (9) On the determination of the appeal— (a) any tax payable in accordance with that determination the payment of which had been postponed, or which had not been charged by the assessment, shall be due and payable as if it were tax charged by an assessment— (i) notice of which was issued on the date on which the inspector issues to the appellant a notice of the total amount payable in accordance with the determination, and (ii) in respect of which no appeal was pending, or (b) any tax overpaid shall be repaid, as the case may require. (10) In this section “inspector” means the inspector or other officer of the Board by whom the notice of assessment was issued ; and references in this section to an agreement being come to with an appellant and giving of notice to or by an appellant include references to an agreement being come to with, and the giving of notice to or by, a person acting on behalf of the appellant in relation to the appeal. (11) Section 45(2) above shall not apply to an application under subsection (3) or (4) above ; and the transfer of proceedings under this Act from one body of Commissioners to another body of Commissioners shall not affect the validity of a determination under subsection (6) above.

• (2) Section 55 of the said Act of 1970 as substituted by subsection (1) above shall have effect in relation to tax charged for a year or other period of assessment ending before 6th April 1973 as if for subsection (1)(b) and (c) there were substituted—

(b) an assessment to surtax, (c) an assessment to income tax made under Schedule 9 to the principal Act (income tax on company distributions) other than an assessment charging tax the time for the payment of which is given by paragraph 2(3) of that Schedule.

• (3) Section 56(9) (statement of case for opinion of the High Court) and section 59(6) (election for county court in Northern Ireland) of the said Act of 1970 shall each be amended by substituting for paragraph (b) of the proviso—

(b) if too little tax has been charged, the amount under-charged shall be due and payable at the expiration of a period of thirty days beginning with the date on which the inspector issues to the other party a notice of the total amount payable in accordance with the order or judgment of that Court.

• (4) In section 48(2) of the said Act of 1970 (application to appeals and other proceedings), for the words “to the omission of section 56(9) below and to any other necessary modifications” there shall be substituted the words “to any necessary modifications, including (except in the case of applications under section 55 below) the omission of section 56(9) below”.

Interest on unpaid tax

46

• (1) For section 86 of the Taxes Management Act 1970 (interest on overdue tax) there shall be substituted—

(86) (1) Any tax charged by an assessment to which this section applies shall carry interest at the prescribed rate from the reckonable date until payment. (2) This section applies to— (a) an assessment to income tax under Schedule A, Schedule C, Schedule D or Schedule E, (b) an assessment charging income tax at a rate other than the basic rate on income from which income tax has been deducted (otherwise than under section 204 of the principal Act) or from or on which income tax is treated as having been deducted or paid or income chargeable under Schedule F, (c) an assessment to capital gains tax, (d) an assessment to corporation tax other than an assessment made under Schedule 14 to the Finance Act 1972 (advance corporation tax). (3) In this section “reckonable date” means— (a) in relation to any tax the date for the payment of which is given by section 55 above and which, if there had been no appeal, would have become due and payable on an earlier date, that earlier date or the date mentioned in subsection (4) below, whichever is the later, and (b) in relation to any tax not falling within paragraph (a) above, the date on which it becomes due and payable. (4) The date referred to in subsection (3)(a) above is the date on which the tax becomes due and payable or the date given by the following Table, whichever is the earlier.