Finance Act 1980

• (1) In section 66(2) of the Finance Act 1976 (exemption from charge to tax in respect of beneficial loan arrangements where cash equivalent of the benefit does not exceed £50) for “£50 ” there shall be substituted “£200 ”.

• (2) Where the amount of interest paid on a loan for the year of assessment in which it is made is not less than interest at the official rate applying for that year for the purposes of section 66 of the said Act of 1976 and the loan is made—

• (a) for a fixed and unvariable period ; and

• (b) at a fixed and unvariable rate of interest,

subsection (1) of that section shall not apply to the loan in any subsequent year by reason only of an increase in the official rate since the year in which the loan was made.

• (3) Where a loan was made at any time before 6th April 1978—

• (a) for a fixed and unvariable period ; and

• (b) at a fixed and unvariable rate of interest,

subsection (1) of the said section 66 shall not apply to the loan if it is shown that the rate of interest is not less than such rate as could have been expected to apply to a loan on the same terms (other than as to the rate of interest) made at that time between persons not connected with each other (within the meaning of section 533 of the Taxes Act) dealing at arm's length.

• (4) This section has effect for the year 1980-81 and subsequent years of assessment.

Benefits in kind: minor amendments

51

• (1) In section 63 of the Finance Act 1976 (cash equivalent of certain benefits)—

• (a) to the words in brackets in subsection (41(b) there shall be added the words “and excluding also any rent or hire charge payable for the asset by those providing the benefit ”; and

• (b) in subsection (6) for the words from “the following applies ” onwards there shall be substituted the words " the annual amount of which is equal to, or greater than, the annual value of the use of the asset as ascertained under subsection (5) above, that amount is to be substituted for the annual value in subsection (4)(a) above. "

• (2) In section 64(4) of that Act (power to alter money sums relating to taxation of cars) after paragraph (b) there shall be inserted—

(c) increase (or further increase) the money sum specified in paragraph 1(1) of Part II of Schedule 7 to this Act

• (3) In section 72(5)(e) of that Act (market value of car to be retail price inclusive of car tax etc.) for the words “of car tax ” there shall be substituted the words “of value added tax and car tax ”.

• (4) In the proviso to section 284(2) of the Taxes Act (expense in providing certain benefits not to count as distribution to participator in close company) after paragraph (a) there shall be inserted—

(aa) of living accommodation for any person if the accommodation is (within the meaning of section 33 of the Finance Act 1977) provided by reason of his employment; or

.

• (5) In section 44(5) and (6) of the Finance Act 1971 (writing-down allowances and balancing adjustments) after the words “Part VIII of the Taxes Act” there shall be inserted the words “or Chapter II of Part III of the Finance Act 1976 ”.

Maintenance funds: charge of income tax

52

• (1) If in the case of a settlement in respect of which the Treasury have given a direction under section 84 of the Finance Act 1976 (maintenance funds for historic buildings)—

• (a) any of the property comprised in the settlement (whether capital or income) is applied otherwise than as mentioned in paragraph (a)(i) or (ii) of subsection (3) of that section; or

• (b) any of that property on ceasing to be comprised in the settlement devolves otherwise than on any such body or charity as is mentioned in paragraph (a)(ii) of that subsection,

then, unless subsection (6) below applies, income tax shall be charged under this section in respect of the settlement.

• (2) Subject to subsection (3) below, tax chargeable under this section shall be charged at the rate of 30 per cent, on the whole of the income which has arisen in the relevant period from the property comprised in the settlement and has not been applied (or accumulated and then applied) as mentioned in subsection (3)(a)(i) or (ii) of the said section 84.

In this subsection “the relevant period” means, if tax has become chargeable under this section in respect of the settlement on a previous occasion, the period since the last occasion and, in any other case, the period since the settlement took effect.

• (3) Tax shall not be chargeable under this section in respect of income which by virtue of Part XVI of the Taxes Act is treated as income of the settlor; but where income arising in any year of assessment is exempted by this subsection any sums applied in that year as mentioned in subsection (3)(a)(i) or (ii) of the said section 84 shall be treated as paid primarily out of that income and only as to the excess, if any, out of income not so exempted.

• (4) Tax charged under this section shall be in addition to any tax chargeable apart from this section and—

• (a) the persons assessable and chargeable with tax under this section shall be the trustees of the settlement; and

• (b) all the provisions of the Income Tax Acts relating to assessments and to the collection and recovery of income tax shall, so far as applicable, apply to the charge, assessment, collection and recovery of tax under this section.

• (5) Tax shall also be chargeable in accordance with the foregoing provisions of this section if any of the property comprised in a settlement to which subsection (1) above applies, on ceasing at any time to be comprised in the settlement, devolves on any such body or charity as is referred to in paragraph (b) of that subsection and at or before that time an interest under the settlement is or has been acquired for a consideration in money or money's worth by that or another such body or charity ; but for the purposes of this subsection any acquisition from another such body or charity shall be disregarded.

• (6) Tax shall not be chargeable under this section in respect of a settlement on an occasion when the whole of the property comprised in it is transferred tax-free into another settlement; but on the first occasion on which tax becomes chargeable under this section in respect of a settlement (“the current settlement”) comprising property which was previously comprised in another settlement or settlements and has become comprised in the current settlement as a result of, or of a series of, tax-free transfers, the relevant period for the purposes of subsection (2) above shall, as respects that property, be treated as having begun—

• (a) on the last occasion on which tax became chargeable under this section in respect of the other settlement or any of the other settlements; or

• (b) if there has been no such occasion, when the other settlement or the first of the other settlements took effect.

• (7) For the purposes of subsection (6) above property is transferred tax-free from one settlement into another if it ceases to be comprised in the first-mentioned settlement and becomes comprised in the other settlement in circumstances such that by virtue of section 89(4)(d) below there is no charge to capital transfer tax by reference to its value.

Maintenance funds: one-estate elections

53

• (1) Where a building or land which is qualifying property for the purposes of subsection (3) of section 84 of the Finance Act 1976 (maintenance funds for historic buildings) forms part of an estate in relation to which an election has effect under section 73 of the Taxes Act (deductions from rents: land managed as one estate)—

• (a) the election shall not cease to have effect by reason only of another part of the estate becoming comprised in, and being managed by the trustees of, a settlement in relation to which the Treasury give a direction under the said section 84 ; and

• (b) that other part shall be treated as continuing to form part of the estate to which the election relates.

• (2) Where a person becomes the owner of any such building or land as is mentioned in subsection (1) above which in the immediately preceding ownership formed part of an estate in relation to which an election under the said section 73 had effect, any other part of that estate which continues to be or becomes comprised in a settlement of the kind mentioned in that subsection shall be treated as part of the estate in relation to which an election may be made by him under that section.

• (3) Where by virtue of this section an election has effect in relation to an estate part of which is comprised in a settlement—

• (a) there may be treated as deductible from the rents arising from that part—

• (i) any payments which are made in respect of the other part of the estate by the trustees of the settlement and which would be so deductible under section 72 of the Taxes Act if that part were also comprised in the settlement; and

• (ii) any payments made in respect of the other part of the estate by its owner to the extent to which they cannot be deducted by him under that section in the chargeable period in which they become due because of an insufficiency of the rents arising in that period from that part; and

• (b) any relief available to the trustees under section 79 of that Act (agricultural relief) in respect of the part of the estate comprised in the settlement shall instead be available to the owner of the other part of the estate.

• (4) Where by virtue of this section an election has effect in relation to an estate part of which is comprised in a settlement, the election shall not cease to have effect in relation to any of that part by reason of its ceasing to be comprised in that settlement if within thirty days it becomes comprised in another settlement in relation to which the Treasury give a direction under the said section 84.

• (5) The inclusion by virtue of this section in an estate of property comprised in a settlement shall not be construed as requiring it to be treated as the property of the person who owns the remainder of the estate or as affecting any question as to the person entitled to the income arising from that property.

Charitable donations by traders

54

• (1) Section 411(8) of the Taxes Act (which disallows expenditure on certain gifts) shall not preclude the deduction, in computing profits or gains under Case I or Case II of Schedule D, of expenditure incurred in making a gift to a body of persons or trust established for charitable purposes only.

• (2) This section has effect in relation to expenditure incurred on or after 1st April 1980.

Charitable dispositions for periods which cannot exceed three years

55

• (1) In section 434 of the Taxes Act (income payable to another under a disposition for a period which cannot exceed six years deemed to be the disponor's income)—

• (a) in subsection (1) after “(1)” there shall be inserted the words “Subject to subsection (1A) below ”;

• (b) after that subsection there shall be inserted—

(1A) Subsection (1) above shall have effect in relation to income which is payable as a covenanted payment to charity as if for the words “six years” there were substituted the words “three years ”

; and

• (c) at the end of subsection (2) of that section there shall be inserted the words “and ” a covenanted payment to charity" means a payment made under a covenant made otherwise than for consideration in money or money's worth in favour of a body of persons or trust established for charitable purposes only whereby the like annual payments (of which the payment in question is one) become payable for a period which may exceed three years and is not capable of earlier termination under any power exercisable without the consent of the persons for the time being entitled to the payments ".

• (2) After subsection (1) of section 445 of that Act (sums payable by settlor under revocable settlement treated as settlor's income except where power to revoke cannot be exercised within six years from first payment) there shall be inserted—

(1A) The proviso to subsection (1) above shall have effect in relation to a payment which is a covenanted payment to charity as if for the words “six years ” there were substituted the words “three years ” ; and in this subsection “covenanted payment to charity” has the same meaning as in section 434(2) above

.

• (3) In section 248 of that Act (allowance of charges on income for corporation tax) in subsection (9) (meaning of “covenanted donation to charity”) for the words “six years ” there shall be substituted the words “three years ”.

• (4) This section has effect for the year 1980-81 and subsequent years of assessment in relation to payments made after 5th April 1980.

Income under charitable covenant not settlor's for excess tax purposes

56

• (1) In paragraph (b) of subsection (1) of section 457 of the Taxes Act (income under a settlement not treated as the settlor's income for the purposes of his excess liability if excluded by subsection (2) of that section) after the word “subsection” there shall be inserted the words “(1A) or ”.

• (2) After that subsection there shall be inserted—

(1A) Subsection (1) above shall not apply to so much of an individual's income as consists of covenanted payments to charity and does not exceed £3,000 in any year of assessment

.

• (3) At the end of subsection (5) of that subsection (interpretation) there shall be inserted—

(c) ' covenanted payments to charity ' shall be construed in accordance with section 434 (2) above.

• (4) In paragraph 3(1) of Schedule 16 to the Finance Act 1972 (apportionment of amounts which have been deducted by close companies in arriving at their distributable income and which in the case of an individual would have been treated as his income in computing his total income), for the words “would have been treated ” there shall be substituted the words “would (apart from section 457(1A) of the Taxes Act) have been treated ”.

• (5) In paragraph 5 of that Schedule (consequences of apportionment: income tax) after sub-paragraph (5) there shall be inserted:

(5A) Where as a result of a company or companies making covenanted payments to charity a sum or sums are apportioned by virtue of paragraph 3 above and form part of the total income of an individual for any year of assessment, his total income for that year and the total amount assessable for that year in respect of that sum or those sums shall be reduced by whichever is the lesser of— (a) the amount of that sum or those sums, and (b) the amount by which the total amount of all covenanted payments to charity which form part of his income for that year by virtue of section 457 of the Taxes Act, or which would form part of it if subsection (1A) of that section were omitted, falls short of £3,000; and in this sub-paragraph “covenanted payments to charity” has the same meaning as in the said section 457.

• (6) This section has effect for the year 1981-82 and subsequent years of assessment in relation to payments made after 5th April 1981.

Registered friendly societies and trade unions

57

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

• (2) The Friendly Societies Act (Northern Ireland) 1970 and the Friendly Societies Act 1974 shall be amended as follows—

• (a) in section 1(3A) of the said Act of 1970 and in section 7(3A) of the said Act of 1974 (registration of societies) for “£1,000” and “£208” there shall be substituted respectively “ £2,000 ” and “ £416 ”; and

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

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

Building societies

58

Trustee savings banks

59

Authorised unit trusts

60

• (1) Section 354 of the Taxes Act (Tax Acts to have effect in relation to income arising to the trustees of an authorised unit trust as if they were an investment company and the unit holders were shareholders) shall not apply in relation to an authorised unit trust under the terms of which the funds of the trust cannot be invested in such a way that income can arise to the trustees which will be chargeable to tax in the hands of the trustees otherwise than—

• (a) under Schedule C as profits arising from United Kingdom public revenue dividends, or

• (b) under Case III of Schedule D ;

and in this subsection “United Kingdom public revenue dividends” means public revenue dividends payable in the United Kingdom (whether they are also payable outside the United Kingdom or not) out of the public revenue of the United Kingdom.

• (2) This section has effect in relation to income arising after 31st March 1980.

Dates for payment of tax

61

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

Interest on unpaid tax

62

• (1) In the provisions mentioned in subsection (2) below (remission of interest on unpaid tax where the amount of interest does not exceed £10) for “£10” there shall be substituted “ £30 ”.

• (2) The provisions referred to above are—

• (a) section 86(6) of the Taxes Management Act 1970 (income tax, corporation tax and capital gains tax);

• (b) section 87(4) of that Act (advance corporation tax and income tax on company payments); and

• (c) section 87(3) of that Act as originally enacted (income tax on company distributions).

• (3) This section has effect in relation to interest on tax charged by assessments notice of which is issued after the passing of this Act.

International Maritime Satellite Organisation

63

Chapter II — Capital Allowances

Machinery and plant

Exclusion of first-year allowances for certain leased assets

64–69

Writing-down allowances etc. in case of leased assets

65

• (1) Where section 64 above precludes the making of a first-year allowance in respect of expenditure incurred by a person on the provision of machinery or plant for leasing in the course of a trade, the following provisions shall have effect with respect to the allowances and charges to be made in the case of the trade (“the actual trade ”) under section 44 of the Finance Act 1971 (writing-down allowances and balancing adjustments).

• (2) It shall be assumed for the purposes of the said section 44—

• (a) that, immediately after the beginning of the chargeable period or its basis period in which the machinery or plant is brought into use, the person carrying on the trade brings the machinery or plant into use for the purposes of a trade carried on by him separately from the actual trade and any other trade carried on by him;

• (b) that the machinery or plant is used for the purposes of the separate trade from then until it ceases altogether to be used for the purposes of the actual trade; and

• (c) that the separate trade is permanently discontinued when the machinery or plant ceases altogether to be used for the purposes of the actual trade,

and the allowance or charge under that section which, on those assumptions and having regard to subsections (3) and (4) below, would fall to be made for any chargeable period in the case of the separate trade shall be made for that period in the case of the actual trade.

• (3) If an allowance under the said section 44 falling by virtue of this section to be made for any chargeable period in the case of the actual trade is not claimed, or is reduced in amount in accordance with a requirement under the proviso to subsection (2) of that section, then, in determining the allowance or charge under that section which would fall to be made for any subsequent chargeable period in the case of the separate trade, any allowance falling to be made in the case of that trade for the first-mentioned chargeable period shall be treated as not claimed or, as the case may be, proportionately reduced.

• (4) Where in the case of any person the said section 44 applies in accordance with this section to different items of machinery or plant it shall apply as if the separate trade for which each item is treated as used were the same trade, and accordingly that trade shall not by virtue of subsection (2)(c) above be treated as permanently discontinued until all those items cease altogether to be used for the purposes of the actual trade.

• (5) Where the said section 44 has effect in accordance with this section in respect of expenditure incurred by a person providing machinery or plant for the purposes of a trade, then, if the machinery or plant is disposed of by him to a person who is connected with him and the disposal is not on an occasion on which the trade is treated as continuing by virtue of section 154(2), 155(1) or 252 of the Taxes Act or paragraph 13 of Schedule 8 to the said Act of 1971—

• (a) the disposal value to be brought into account under the said section 44 in the case of the separate trade shall be of an amount equal to the price which the machinery or plant would have fetched on a sale at the same time in the open market or, if less, the capital expenditure incurred or treated as incurred on the provision of the machinery or plant by the person disposing of it; and

• (b) the person acquiring it shall be treated for the purposes of Chapter I of Part III of the said Act of 1971 as having incurred on its provision expenditure equal to that disposal value.

• (6) This section applies also where section 64 above would have precluded the making of a first-year allowance in respect of any expenditure if the making of such an allowance in respect of the expenditure were not already precluded by paragraph 3 of Schedule 8 to the said Act of 1971 ; but this section does not apply to machinery or plant in relation to which the said section 44 applies in accordance with paragraph 5, 6 or 10 of that Schedule.

Recovery of excess relief

66

• (1) Where a first-year allowance has been made in respect of expenditure incurred in providing machinery or plant and the machinery or plant is at any time in the requisite period used otherwise than for a qualifying purpose—

• (a) an amount equal to the excess relief shall, in relation to the person to whom the machinery or plant then belongs, be treated as if it were a balancing charge to be made on him for the chargeable period in which, or in the basis period for which, the machinery or plant is first so used ; and

• (b) section 44 of the Finance Act 1971 (as it has effect in accordance with section 65 above) shall apply as if that amount were qualifying expenditure of that person for the next chargeable period and, for the purpose of bringing any disposal value into account, as if the machinery or plant had always been used for the purposes of the separate trade.

• (2) The excess relief is the excess, if any, of—

• (a) the first-year allowance made in respect of the expenditure and any writing-down allowance or allowances made in respect of it for the chargeable period related to the incurring of the expenditure and any subsequent chargeable period up to and including that mentioned in subsection (1)(a) above, over

• (b) the maximum writing-down allowance or allowances that could have been made in respect of it for those chargeable periods if the first-year allowance had not and could not have been made.

• (3) Where as a result of a requirement under section 41(3) of the said Act of 1971 (reduction of first-year allowances) an aggregate amount of first-year allowances in respect of different items of machinery or plant is reduced there shall be treated for the purposes of subsection (2) above as having been made in respect of each item a reduction proportionate to the capital expenditure on the provision of that item.

• (4) For the purposes of subsection (2) above the writing-down allowance or allowances that were made or would have been made in respect of any item of machinery or plant shall be determined as if that item were the only item of machinery or plant in relation to which the said section 44 had effect.

• (5) Where the person to whom any machinery or plant belongs at a time when it is first used otherwise than for a qualifying purpose has acquired it as a result of a transaction which was, or a series of transactions each of which was, between connected persons and a first-year allowance in respect of expenditure on the provision of the machinery or plant has been made to any of those persons—

• (a) subsection (2) above shall have effect as if it referred to that first-year allowance and to the expenditure in respect of which it was made ;

• (b) for the purposes of that subsection any consideration paid or received on a disposal of the machinery or plant between connected persons shall be disregarded; and

• (c) if a balancing allowance or balancing charge is made in respect of the machinery or plant there shall be made such adjustments of the total relief falling to be taken into account under paragraph (a) of that subsection as are just and reasonable in the circumstances ;

but this subsection does not apply where section 154(2), 155(1) or 252(2) of the Taxes Act or paragraph 13(a) and (b) of Schedule 8 to the said Act of 1971 (succession to trades) applied on the occasion of the transaction or transactions in question.

• (6) Where the person to whom any machinery or plant belongs at such a time as is mentioned in subsection (5) above acquired it as there mentioned and—

• (a) a first-year allowance in respect of expenditure on the provision of the machinery or plant could have been made to any of the connected persons but was not claimed or was disclaimed ; and

• (b) a balancing allowance is made to any of those persons in respect of that expenditure,

this section shall with the necessary modifications apply as it applies where a first-year allowance has been made.

• (7) If at any time in the requisite period a new ship is used otherwise than for a qualifying purpose, then, without prejudice to the other provisions of this section—

• (a) no allowance shall be made in respect of it under subparagraph (2)(c) of paragraph 8 of Schedule 8 to the said Act of 1971 for the chargeable period in which it is first so used or for any subsequent chargeable period; and

• (b) section 44 of that Act (as it has effect in accordance with section 65 above) shall apply as if the amount of any allowance in respect of the ship which has been postponed under that paragraph and not made were qualifying expenditure for the next chargeable period after that in which the ship is first so used.

Information

67

• (1) A claim by a person other than a company for a first-year allowance in respect of expenditure to which section 64 above applies, and a return by a company of profits in the computation of which a deduction is made on account of such an allowance, shall be accompanied by a certificate—

• (a) stating that the machinery or plant in question will be used for a qualifying purpose in the requisite period, will not be used for any other purpose in that period and has not been used for any other purpose in any part of that period which has already elapsed ; and

• (b) containing a description of the machinery or plant in question or, if the claim or deduction relates to more than one item of machinery or plant and those items are of different kinds, a description of the different kinds and the amount claimed or deducted in respect of each of them.

• (2) Where a person other than a company has claimed a first-year allowance in respect of any expenditure, or a deduction on account of such an allowance has been made in computing profits in respect of which a return has been made by a company, and the machinery or plant in question is at any time in the requisite period used otherwise than for a qualifying purpose, the person to whom it then belongs shall give written notice of that fact to the inspector, specifying the use to which the machinery or plant has been put; and, subject to subsection (3) below, any such notice shall—

• (a) be given within three months after the end of the chargeable period or its basis period in which the machinery or plant is first used as aforesaid ; and

• (b) relate to all the items of machinery or plant (if more than one) in respect of which that person is required to give a notice under this subsection in respect of that period.

• (3) If at the end of the three months mentioned in paragraph (a) of subsection (2) above the person concerned does not know and cannot reasonably be expected to know that any item of machinery or plant in respect of which he is required to give a notice under that subsection has been used otherwise than for a qualifying purpose he shall in respect of that item give the notice within thirty days of his coming to know that it has been so used.

• (4) Where a first-year allowance has been made in respect of any expenditure, the inspector may by notice in writing require—

• (a) any person to whom the machinery or plant belongs or has belonged, or who is or has been in possession of it under a lease, during the requisite period; and

• (b) the personal representatives of any such person,

to furnish him, within such period (not being less than thirty days) as may be specified in the notice, with such information as he may require and the person to whom the notice is addressed has or can reasonably obtain about the leasing of the machinery or plant or the use to which it is being or has been put.

Joint lessees

68

• (1) The foregoing provisions of this Chapter shall have effect in accordance with this section where machinery or plant is leased to two or more persons jointly.

• (2) Subsection (2)(a) of section 64 above shall not apply at any time when the machinery or plant is leased as aforesaid but if the lessees use the machinery or plant for the purposes of a trade or trades, otherwise than for leasing, it shall be regarded as used for a qualifying purpose if and to the extent to which it appears that the profits or gains of the trade or trades arising throughout the requisite period (or the period of the lease, if shorter) will be chargeable to income tax or corporation tax.

• (3) Where by virtue of subsection (2) above a first-year allowance may be made in respect of part only of the expenditure on the provision of any machinery or plant, then, whether or not the machinery or plant continues to be leased as aforesaid, section 44 of the Finance Act 1971 (writing-down allowances and balancing adjustments) and sections 65 and 66 above shall have effect as if—

• (a) that part were expenditure on the provision of a separate item of machinery or plant; and

• (b) the remainder were expenditure on the provision of another item of machinery or plant;

and there shall be made all such apportionments as are necessary in consequence of this subsection.

• (4) Where by virtue of subsection (2) above a first-year allowance has been made in respect of the whole or part of the expenditure on the provision of any machinery or plant and at any time in the requisite period while it is leased as aforesaid no lessee uses it for the purpose of a trade or trades the profits or gains of which are chargeable to income tax or corporation tax, section 66 above shall have effect as if the machinery or plant or, as the case may be, the separate item referred to in subsection (3) (a) above had at that time been used otherwise than for a qualifying purpose.

• (5) Where by virtue of subsection (2) above a first-year allowance has been made in respect of the whole or part of the expenditure on the provision of any machinery or plant and at the end of the requisite period the machinery or plant is leased as aforesaid but subsection (4) above has not had effect, then, if it appears that the extent to which the machinery or plant has been used for the purposes of such trade or trades as aforesaid is less than that by reference to which the amount of the first-year allowance was determined—

• (a) section 66 above shall have effect as if a part of the expenditure corresponding to the reduction in the extent of such use were expenditure on the provision of a separate item of machinery or plant used otherwise than for a qualifying purpose on the last day of that period; and

• (b) any disposal value subsequently brought into account in respect of the machinery or plant under section 44 of the said Act of 1971 shall, instead of being apportioned in accordance with subsection (3) above, be apportioned by reference to the extent of such use as determined at the end of that period.

• (6) Where the claim or deduction referred to in subsection (1) of section 67 above relates to a first-year allowance which by virtue of subsection (2) above is in respect of part only of any expenditure, the certificate required by the said subsection (1) shall include a statement of the extent to which the profits or gains referred to in subsection (2) above will be chargeable to tax as there mentioned.

• (7) In subsection (2) of section 67 above the reference to machinery or plant being used otherwise than for a qualifying purpose shall include a reference to machinery or plant being treated as so used by virtue of subsection (4) above.

• (8) Where a first-year allowance has been made in respect of expenditure on the provision of machinery or plant otherwise than by virtue of subsection (2) above and the machinery or plant is subsequently leased in the requisite period to two or more persons jointly, subsections (4), (5) and (7) above shall apply as if the first-year allowance had been made by virtue of subsection (2) above and had been so made in respect of the whole of the expenditure.

Writing-down allowances etc. for cars

69

The machinery or plant in relation to which section 44 of the Finance Act 1971 (writing-down allowances and balancing adjustments) has effect in accordance with section 65 above shall include any vehicle in respect of which the making of a first year allowance is precluded by section 43 of that Act other than a vehicle to which paragraph 10 of Schedule 8 to that Act applies.

Leasing by individuals

70

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

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

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

Quarantine premises

71–76

Commencement and transitional provisions

72

• (1) Subject to subsection (5) below, sections 64 to 69 above apply to expenditure incurred on or after 1st June 1980 except that those sections do not affect expenditure incurred by a person on the provision of machinery or plant if the expenditure consists of the payment of sums payable under a contract entered into by him before 27th March 1980 and the machinery or plant is brought into use not later than 27th March 1982.

• (2) Those sections apply also to expenditure incurred by a person before 1st June 1980 if the expenditure—

• (a) is on the provision of machinery or plant which does not belong to him before that date ; and

• (b) consists of the payment of sums payable under a contract entered into by him on or after 27th March 1980 with a connected person.

• (3) Section 70 above applies to expenditure incurred on or after 27th March 1980 except that that section does not affect expenditure incurred by a person on the provision of machinery or plant if the expenditure consists of the payment of sums payable under a contract entered into by him before that date and the machinery or plant is brought into use not later than 27th March 1982.

• (4) Part I of Schedule 12 to this Act shall have effect for restricting first-year allowances in respect of certain expenditure incurred on or after 24th October 1979 and before 1st June 1980 but that Part does not affect expenditure incurred by a person on the provision of machinery or plant if the expenditure consists of the payment of sums payable under a contract entered into by him before the said 24th October and the machinery or plant is brought into use not later than 24th October 1981.

• (5) Part II of Schedule 12 to this Act shall have effect for excluding from section 64 above certain expenditure incurred before 1st June 1986 and for restricting first-year allowances in respect of that expenditure.

Interpretation

73

• (1) The Tax Acts shall have effect as if the foregoing provisions of this Chapter and the provisions of Schedule 12 to this Act were contained in Chapter I of Part III of the Finance Act 1971 except that expenditure shall not be treated for the purposes of section 72 above as having been incurred after the date on which it was in fact incurred by reason only of so much of section 50(4) of that Act as relates to expenditure incurred before a trade begins.

• (2) References in those provisions to a lease include references to a sub-lease and references to a lessor or lessee shall be construed accordingly.

• (3) For the purposes of those provisions letting a ship on charter or any other asset on hire shall be regarded as leasing it if, apart from this subsection, it would not be so regarded.

• (4) In those provisions “qualifying purpose ” and “requisite period ” have the meanings given in section 64 above.

• (5) Without prejudice to section 47 of the said Act of 1971 (application to activities other than trades) references in those provisions to the use of machinery or plant for the purposes of a trade include references to its use for any purpose in connection with which a first-year allowance can be given by virtue of that section.

• (6) Section 533 of the Taxes Act (connected persons) applies for the purposes of those provisions.

Industrial and commercial buildings

Enterprise zones

74

• (1) Chapter I of Part I of the Capital Allowances Act 1968 (industrial buildings allowances)—

• (a) shall apply with the modifications specified in Schedule 13 to this Act in relation to capital expenditure on the construction of an industrial building or structure.; and

• (b) shall, as so modified, apply in relation to capital expenditure on the construction of a qualifying hotel or of a commercial building or structure as if it were an industrial building or structure,

in any case where the expenditure is incurred, or is incurred under a contract entered into, at a time when the site of the industrial building or structure, the qualifying hotel or the commercial building or structure is in an enterprise zone, being a time not more than ten years after the site was first included in the zone.

• (2) In this section “enterprise zone” means an area designated as such by an order made by the Secretary of State under powers in that behalf conferred by any Act passed in the same Session as this Act or, in Northern Ireland, by an order made by the Department of the Environment for Northern Ireland under powers in that behalf conferred by an Order in Council under the Northern Ireland Act 1974.

• (3) In this section “qualifying hotel” has the same meaning as for the purposes of section 38 of the Finance Act 1978; and Chapter I of Part I of the said Act of 1968 shall not by virtue of that section apply to expenditure to which that Chapter applies by virtue of this section.

• (4) In this section “commercial building or structure” means a building or structure, other than an industrial building or structure or a qualifying hotel, which is used for the purposes of a trade, profession or vocation or, whether or not for such a purpose, as an office or offices but does not include any building or structure in use as, or as part of, a dwelling-house.

• (5) For the purposes of subsection (1) above expenditure shall not by reason only of section 1(6) or 5(1) of the said Act of 1968 be treated as having been incurred after the date on which it was in fact incurred.

• (6) Section 14 of the Finance Act 1975 (expenditure on thermal insulations) shall not apply to expenditure to which this section applies ; and section 64 above shall not apply to expenditure incurred at any time on the provision of machinery or plant which is to be an integral part of a building or structure if this section would apply to expenditure incurred at that time on the construction of that building or structure.

• (7) The Tax Acts shall have effect as if this section and Schedule 13 to this Act were contained in Chapter I of Part I of the said Act of 1968.

Small workshops

75

• (1) Chapter I of Part I of the Capital Allowances Act 1968 (industrial buildings allowances) shall apply with the modifications specified in paragraphs 1 to 3 of Schedule 13 to this Act in relation to capital expenditure on the construction of an industrial building to which this section applies if the expenditure is incurred after 26th March 1980 and before 27th March 1983.

• (2) This section applies to an industrial building if the gross internal floor space of the whole building will not exceed 2,500 square feet.

• (3) Where the industrial building is part of a larger building the reference in subsection (2) above to the gross internal floor space of the whole of the building shall be construed as a reference to the gross internal floor space of the whole of that part and this section shall not apply unless that part is permanently separated from the remainder of the building, is intended for occupation separately from the remainder of the building and is suitable for being so occupied.

• (4) The reference in subsection (1) above to capital expenditure on the construction of a building includes a reference to capital expenditure on the construction of any ancillary works.

• (5) For the purposes of subsection (1) above expenditure shall not by reason only of section 1(6) or 5(1) of the said Act of 1968 be treated as having been incurred after the date on which it was in fact incurred.

• (6) Section 14 of the Finance Act 1975 (expenditure on thermal insulation) shall not apply to expenditure to which this section applies; and section 64 above shall not apply to expenditure incurred at any time on the provision of machinery or plant which is to be an integral part of a building if this section would apply to expenditure incurred at that time on the construction of the building.

• (7) The Tax Acts shall have effect as if this section were contained in Chapter I of Part I of the said Act of 1968.

Tenancies

76

• (1) The proviso to section 1(4) of the Capital Allowances Act 1968 (which defers the making of an initial allowance where the building or structure is first used by a tenant) shall cease to have effect.

• (2) This section applies in relation to—

• (a) expenditure incurred on or after 27th March 1980; and

• (b) expenditure which was incurred before that date but by reason of the said proviso has not before that date become eligible for an initial allowance;

but expenditure to which this section applies by virtue of paragraph (b) above shall be treated for the purposes of the said section 1(4) as if it had been incurred on that date.

Chapter III — Capital Gains

Exemption for first ó,000 of gains of individuals

77

Exemption for first ñ,500 of gains of trusts

78

General relief for gifts

79

Exemption for private residences

80

Exemption for authorised unit trusts etc.

81

Maintenance funds for historic buildings

82

Consideration on disposal of assets

83

Traded options

84

Part IV — Capital Transfer Tax

Reduction of tax

85–87

Exemptions

86

• (1) Schedule 6 to the Finance Act 1975 (exempt transfers) shall be amended as follows.

• (2) In paragraph 1(2) and (3) (exemption limit for transfers to non-domiciled spouse) for “£25,000” there shall be substituted “£50,000 ”.

• (3) In paragraph 4(1) (small gifts to same person) for “£100 ” there shall be substituted “£250 ”.

• (4) In paragraph 10(1)(b) and (4) (limit on exempt gifts to charities) for “£100,000 ” there shall be substituted “£200,000 ”.

• (5) Subsections (2) and (4) above apply to any transfer of value made on or after 26th March 1980 and subsection (3) above applies to any transfer of value made on or after 6th April 1980.

Mutual transfers

87

• (1) Sections 86 and 87 of the Finance Act 1976 (mutual transfers) shall be amended as follows.

• (2) After section 86(5) there shall be inserted—

(6) The extent to which the donee's transfer is an exempt transfer by virtue of subsection (2) above shall be determined without regard to Schedule 10 to this Act, and that Schedule shall not apply to that transfer to the extent to which it is an exempt transfer by virtue of that subsection. (7) Paragraph 11(1) of Schedule 10 to the said Act of 1975 (valuation of life policies etc.) shall not apply in determining the amount mentioned in subsection (2)(a) above.

• (3) For paragraph (a) of subsection (5) of section 87 there shall be substituted—

(a) whichever is the smaller of— (i) the amount by which the donee's estate was increased by the donor's transfer; or (ii) the amount by which the donor's estate was increased by the donee's transfer; or

;

and in paragraph (b) of that subsection for the words “that amount” there shall be substituted the words “the amount applying under paragraph (a) above ”.

• (4) After section 87(5) there shall be inserted—

(5A) Where the value transferred by the donor's transfer fell to be calculated in accordance with the provisions of Schedule 8 to the Finance Act 1975 (agricultural relief) or Schedule 10 to this Act, the value restored by the donee's transfer as determined under subsection (5) above shall be treated as reduced to such part of it as bears to the whole the same proportion as the value transferred by the donor's transfer after applying those provisions bears to the value transferred by it before applying those provisions. (5B) Paragraph 11(1) of Schedule 10 to the said Act of 1975 (valuation of life policies etc.) shall not apply in determining the amount mentioned in subsection (5)(a)(ii) above.

• (5) This section shall be deemed to have come into force on 27th March 1980.

Maintenance funds: requirements and eligible property

88

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

• (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Maintenance funds: charge of tax

89–91

Maintenance funds: other amendments

90

• (1) Subject to subsections (2) and (3) below, a transfer of property or other event shall not constitute or give rise to a distribution payment or capital distribution under any provision of Schedule 5 to the Finance Act 1975 (settled property) if not later than thirty days after the date of the transfer or event an individual makes a transfer of value—

• (a) which is exempt under section 84 of the Finance Act 1976 (maintenance funds for historic buildings); and

• (b) the value transferred by which is attributable to the property by reference to which the amount of the distribution payment or capital distribution would have fallen to be determined.

• (2) Subsection (1) above does not apply if the individual has acquired the property referred to in paragraph (b) for a consideration in money or money's worth; and for the purposes of this subsection an individual shall be treated as acquiring any property for such consideration if he becomes entitled to it as a result of transactions which include a disposition for such consideration (whether to him or another) of that or other property.

• (3) Subsection (1) above does not apply if—

• (a) the amount of the distribution payment or capital distribution exceeds the value of the property which by virtue of the exempt transfer becomes comprised in the settlement referred to in the said section 84; or

• (b) the individual receives any consideration in money or money's worth for that property;

but in a case where that subsection would apply but for the foregoing provisions of this subsection the amount of the distribution payment or capital distribution shall be treated as equal to the excess referred to in paragraph (a) above or, as the case may be, to the consideration referred to in paragraph (b) above or, where both paragraphs apply, to the aggregate of the excess and the consideration.

• (4) Where the Treasury have given a direction in respect of a settlement under the said section 84 the trusts of the settlement shall be enforceable at the suit of the Treasury and the Treasury shall, as respects the appointment, removal and retirement of trustees, have the rights and powers of a beneficiary.

Discretionary trusts: credit for annual charge

91

• (1) At the end of paragraph 12(3) of Schedule 5 to the Finance Act 1975 (under which tax charged under paragraph 12(2) is allowed as a credit against the tax chargeable on the next capital distribution out of the settlement) there shall be inserted the words " and if the tax charged exceeds the tax so chargeable the excess shall be allowed as a credit against the tax chargeable on the next subsequent such capital distribution and so on. "

• (2) This section shall be deemed always to have had effect.

Provision for dependants of deceased persons

92

Proper liferent and fee

93

• (1) In section 51(1) of the Finance Act 1975 there shall be inserted at the end of the definition of “reversionary interest ” the words “and in relation to Scotland includes an interest in the fee of property subject to a proper liferent”.

• (2) Paragraph 1 of Schedule 5 to that Act shall be amended as follows—

• (a) at the end of sub-paragraph (4) (b) there shall be added—

(c) any deed creating or reserving a proper liferent of any property whether heritable or moveable (the property from time to time subject to the proper liferent being treated as the property comprised in the settlement).

; and

• (b) in sub-paragraph (9) after the words “capable of enjoyment ” there shall be inserted the words “including an interest of an assignee under an assignation of an interest of any kind (other than a reversionary interest) in property subject to a proper liferent ”.

• (3) At the end of section 68(4) of the Finance Act 1978 there shall be added—

In the application of this subsection to Scotland, property which is subject to a proper liferent shall be deemed to be held in trust for the liferenter.

• (4) This section applies—

• (a) to any transfer of value made after 17th April 1980 ;

• (b) if any person liable for capital transfer tax on the transfer so elects, to any transfer of value made on or before 17th April 1980 in respect of which payment of capital transfer tax has not been made and accepted in full satisfaction of the hability.

Delivery of accounts

94

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

• (7) In section 12 of the Customs, Inland Revenue, and Savings Banks Act 1877 (transmission and custody of inventories in Scotland)—

• (a) for the word “All”, where first occurring, there shall be substituted the words “ To the extent that the Registrar, Capital Taxes Office at Edinburgh may require, ” ; and

• (b) the words “as often as required” shall cease to have the effect.

• (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part V — Stamp Duty

Reduction of stamp duty on conveyances and leases

95

Loan capital denominated in sterling

96

Shared ownership transactions

97

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

Maintenance funds for historic buildings

98

• (1) No stamp duty shall be chargeable on any instrument whereby property ceases to be comprised in a settlement if as a result of the property or part of it becoming comprised in another settlement (otherwise than by virtue of the instrument itself) there is by virtue of paragraph 9(1) or 17(1) of Schedule 4 to the Capital Transfer Tax Act 1984 there is no charge to capital transfer tax in respect of the property ceasing to be comprised in the settlement or a reduced charge to that tax by virtue of paragraph 9(4) or 17(4) of that Schedule but where only part of the property becomes comprised in the other settlement this subsection shall not affect the stamp duty chargeable on the instrument by reference to the other part.

• (2) An instrument in respect of which stamp duty is not chargeable by virtue only of this section or in respect of which the duty chargeable is reduced by virtue of this section shall not be treated as duly stamped unless it is stamped in accordance with section 12 of the Stamp Act 1891 with a stamp denoting that it is not chargeable with any duty or that it is duly stamped.

Charitable covenants for variable amounts

99

Dealers in unlisted securities

100

Unit trusts

101

Conveyance in consideration of debt

102

• (1) Where—

• (a) any property is conveyed to any person wholly or in part in consideration of a debt due to him; and

• (b) apart from this section the consideration in respect of which the conveyance would be chargeable in ad valorem duty by virtue of section 57 of the Stamp Duty Act 1891 (which deemed the debt to be the consideration) would exceed the value of the property conveyed,

that consideration shall be treated as reduced to that value.

• (2) Where subsection (1) above applies in relation to any conveyance, it shall not be treated as stamp duty unless it is stamped in accordance with section 12 of the said Act of 1891 with a stamp denoting that it is not chargeable with any duty or that it is duly stamped.

Admission of Northern Ireland barristers etc.

103

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

Part VI — Oil Taxation

Increase of petroleum revenue tax

104

• (1) In section 1(2) of the Oil Taxation Act 1975 (rate of petroleum revenue tax) for the words “60 per cent.” there shall be substituted the words “ 70 per cent. ”.

• (2) This section has effect in relation to chargeable periods ending after 31st December 1979.

Advance payments of tax

105

• (1) Every participator in an oil field shall when he delivers to the Board the statement which section 1(1)(a) of the Petroleum Revenue Tax Act 1980 requires him to deliver with his return for a chargeable period—

• (a) deliver to the Board a statement showing whether any, and if so what, amount is payable by him under this section as an advance payment of tax in respect of the field for the next chargeable period; and

• (b) if any amount is so payable, pay to the Board a sum equal to that amount.

• (2) The statement under subsection (1)(a) above shall be in such form as the Board may prescribe.

• (3) The amount payable by a participator as an advance payment of tax in respect of a field for a chargeable period shall be equal to 15 per cent. of whichever is the greater of—

• (a) the amount of tax, if any, shown in the statement delivered by him under the said section 1(1)(a) as payable by him in respect of the field for the last chargeable period; and

• (b) the amount of tax, if any, assessed on him in respect of the field for the last chargeable period but one, less any part of it withheld under paragraph 14 of Schedule 2 to the Oil Taxation Act 1975 (appeals).

• (4) The Treasury may by an order made by statutory instrument alter the percentage for the time being specified in subsection (3) above, but no order increasing that percentage shall be made unless a draft of the order has been laid before, and approved by a resolution of, the House of Commons.

• (5) The sum paid by a participator as an advance payment of tax in respect of a field for a chargeable period—

• (a) shall, to the extent to which it does not exceed the sum which subsection (1)(b) of section 1 of the said Act of 1980 requires him to pay when delivering his return for that period in respect of the field—

• (i) discharge his liability to pay the whole or a corresponding part of that sum; and

• (ii) be treated for the purposes of subsection (3) of that section as if it were, or were part of, a sum paid by him under subsection (1)(b) of that section; and

• (b) shall, to the extent to which it exceeds the sum required to be paid by him as aforesaid, be repaid to him.

• (6) Any amount payable by a participator as an advance payment of tax in respect of a field for a chargeable period and not paid by him shall carry interest at the rate applying under paragraph 15 of Schedule 2 to the said Act of 1975 from two months after the beginning of that period until—

• (a) two months after the end of that period; or

• (b) payment of the sum referred to in subsection (5)(a) above,

whichever is the earlier.

• (7) Where the sum paid by a participator as an advance payment of tax in respect of a field for a chargeable period (including any part of it repaid under subsection (5)(b) above) exceeds the amount of the tax assessed on him in respect of the field for that period (less any part of it withheld under paragraph 14 of the said Schedule 2) he shall be entitled to receive from the Board interest at the rate applying under paragraph 16 of that Schedule—

• (a) on the excess, from—

• (i) two months after the beginning of that period; or

• (ii) the date on which that sum was paid,

whichever is the later, until two months after the end of that period; and

• (b) if any of that sum falls to be repaid under subsection (5)(b) above, on the amount repayable (or, if less, the excess mentioned in paragraph (a) above) from—

• (i) two months after the end of that period; or

• (ii) the date on which he delivers the statement which section 1(1)(a) of the said Act of 1980 requires him to deliver with his return for that period,

whichever is the later, until the order for repayment is issued;

• (8) Certificates of tax deposit issued by the Treasury under section 12 of the National Loans Act 1968 on terms published on or before 14th May 1979 may be used for making advance payments under this section; and for that purpose those terms shall have effect with the necessary modifications and as if the tax in or towards the payment of which a certificate is used were due two months after the beginning of the chargeable period to which it relates.

• (9) This section shall be construed as one with Part I of the said Act of 1975 and has effect where the chargeable period referred to in subsection (1)(a) above ends on or after 30th June 1981.

Transfers of interests in oil fields

106

Schedule 17 to this Act shall have effect for supplementing and modifying Part I of the Oil Taxation Act 1975 where after the passing of this Act a participator in an oil field transfers the whole or part of his interest in the field.

Transmedian fields

107

• (1) The Oil Taxation Acts shall have effect in accordance with this section where provision is made by an agreement between the government of the United Kingdom and the government of another country for—

• (a) the exploitation as a single unit of oil in strata in the sea bed and subsoil of an area consisting of—

• (i) an oil field within the meaning of Part I of the Oil Taxation Act 1975; and

• (ii) a sector under the jurisdiction of the other country; and

• (b) the apportionment of the oil between—

• (i) the participators in that field; and

• (ii) the persons who are, or have rights, interests or obligations of, licensees in respect of that sector under the law of the other country.

• (2) The share of a participator in the oil won from the oil field shall be determined as if the oil won from the field consisted of so much of the oil won from the area as a whole as is apportioned to the participators in accordance with the agreement; and in section 10(3)(b) of the said Act of 1975 (restriction of allowable expenditure) and paragraphs 5(2)(a) and 7 of Schedule 2 to that Act (returns and information as to oil won from the field) references to oil won from the field shall be construed as references to so much of the oil won from the area as a whole as is so apportioned.

• (3) Subject to subsection (2) above—

• (a) the oil field shall be deemed to include the sector mentioned in subsection (1)(a)(ii) above;

• (b) that sector shall be deemed to be a designated area; and

• (c) references to oil shall include references to any substance that would be oil within the meaning of the said Act of 1975 if the enactments mentioned in section 1(1) extended to that sector;

but paragraph (a) above does not affect section 10(3)(a) of that Act or paragraph 4 of Schedule 2 to that Act (appointment of responsible person), and paragraph (b) above does not affect section 5(1)(b) of that Act (abortive exploration expenditure) or operate so as to apply section 38(4) of the Finance Act 1973 (taxation of non-residents engaged in activities in designated areas) to the persons referred to in subsection (1)(b)(ii) above.

• (4) Where under the agreement there is a re-determination of the apportionment mentioned in subsection (1)(b) above and in consequence thereof the participators in the field receive a repayment in respect of expenditure which has been allowed for the field under section 3 of the said Act of 1975, the total amount of expenditure allowable under that section and section 4 of that Act for the field in the claim period in which the repayment is received shall be reduced by the amount of the repayment; and paragraph 6 of Schedule 4 to that Act (recovery of deductions from allowable expenditure) shall have effect as if the foregoing provisions of this subsection were relevant provisions within the meaning of that paragraph.

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

• (6) In subsections (4) above references to a repayment include references to a credit or set-off.

• (7) In this section “the Oil Taxation Acts” means the Oil Taxation Act 1975, any other enactment relating to petroleum revenue tax and the provisions of the Income Tax Acts and Corporation Tax Acts in their application to oil extraction activities and oil rights within the meaning ofPart 8 of the Corporation Tax Act 2010 or Chapter 16A of Part 2 of the Income Tax (Trading and Other Income) Act 2005.

• (8) This section has effect whether the agreement mentioned in subsection (1) above is made before or after the passing of this Act and applies in relation to a chargeable period ending before the coming into force of this Act as well as to a chargeable period ending later.

Gas banking schemes

108

• (1) Subject to the provisions of this section, the Board may by regulations made by statutory instrument modify the operation of the Oil Taxation Acts in their application to cases where—

• (a) a gas banking scheme is in force between the participators in two or more oil fields; and

• (b) the participators in those fields elect that the modifications prescribed by the regulations shall apply.

• (2) Subject to subsection (3)(a) below, a gas banking scheme for the purposes of this section is any scheme which provides for the transfer of oil consisting of gas won from one of the oil fields to which the scheme applies to or to the order of the participators in another of those fields in consideration wholly or mainly of the subsequent transfer of oil consisting of gas won from the other field to or to the order of the participators in the first-mentioned field.

• (3) Regulations under this section may—

• (a) prescribe additional conditions required to be satisfied for a scheme to constitute a gas banking scheme, including conditions requiring the gas to be of a description specified in the regulations;

• (b) prescribe conditions subject to which, and the manner in which, an election may be made under this section and the time for which any such election is to continue in force; and

• (c) contain such incidental, supplementary or transitional provisions as appear to the Board to be necessary or expedient.

• (4) The foregoing provisions of this section shall apply to an international gas banking scheme as they apply to a gas banking scheme within the meaning of those provisions except that only the participators in the oil field or oil fields to which the scheme applies need make the election referred to in subsection (1)(b) above; and for the purposes of this section an international gas banking scheme is any scheme which—

• (a) applies to areas that include both one or more oil fields and one or more areas under the jurisdiction of a country other than the United Kingdom; and

• (b) would be a gas banking scheme within the meaning of the foregoing provisions if all the areas were oil fields and all the persons who are, or have rights, interests or obligations of, licensees in respect of those areas were participators.

• (5) Regulations under this section may be made so as to apply only to gas banking schemes other than international gas banking schemes or so as to apply only to the latter; and regulations applying to a scheme of either description may differ from those applying to the other.

• (6) No regulations shall be made under this section unless a draft of the regulations has been laid before, and approved by a resolution of, the House of Commons.

• (7) In this section “the Board”, “oil”, “oil field” and “participator” have the same meaning as in Part I of the Oil Taxation Act 1975 and “the Oil Taxation Acts” has the same meaning as in section 107 above.

Fractionation

109

• (1) The Oil Taxation Act 1975 shall be amended as follows.

• (2) In the definition of “initial treatment” in section 12(1) for paragraph (b) there shall be substituted—

1. separating oil so won and consisting of gas from other oil so won; or
2. separating oil so won and consisting of gas of a kind that is transported and sold in normal commercial practice from other oil so won and consisting of gas; or
3. liquifying oil so won and consisting of gas of such a kind as aforesaid for the purpose of transporting it; or
4. subjecting oil so won to any process of which the purpose is to secure that oil disposed of crude has the quality that is normal for oil so disposed of from the field,

.

• (3) In paragraph (i) of that definition for the words “paragraph (a) or (b) of this definition” there shall be substituted the words “ any of paragraphs (a) to (e) of this definition ”.

• (4) For paragraph (ii) of that definition there shall be substituted—

1. any activity carried on as part of, or in association with, the refining of oil not consisting of gas or any activity the sole or main purpose of which is to achieve a chemical reaction in respect of oil consisting of gas; or

.

• (5) After the definition of “production purposes” in section 12(1) there shall be inserted—

• “refining”, in relation to oil, does not include subjecting it to initial treatment and “refined” and “refinery” shall be construed accordingly;

.

• (6) In paragraph 2 of Schedule 3 (definition of market value of oil) after sub-paragraph (3) there shall be inserted—

(3A) Where all or any of the oil whose market value falls to be ascertained in accordance with sub-paragraphs (1) and (2) above has been subjected to initial treatment before being disposed of or relevantly appropriated, the appropriate initial treatment referred to in sub-paragraph (2)(a) above shall, as respects that oil, include the whole of that treatment.

• (7) After the said paragraph 2 there shall be inserted—

(2A) (1) Paragraph 2 above shall have effect in accordance with this paragraph where the oil whose market value falls to be ascertained at any time in accordance with sub-paragraphs (1) and (2) of that paragraph, or in accordance with those sub-paragraphs as modified by sub-paragraph (3) of that paragraph, consists of or includes gas. (2) Sub-paragraph (2)(a) of paragraph 2 above shall not apply to so much of the oil as consists of gas unless— (a) it has been subjected to initial treatment before being disposed of or relevantly appropriated; or (b) it has, after being disposed of or relevantly appropriated, been subjected to initial treatment by or on behalf of the participator in question or by or on behalf of a person who is connected with him within the meaning of section 533 of the Taxes Act; and where oil consisting of gas has, whether before or after being disposed of or relevantly appropriated, been subjected to initial treatment by or on behalf of the participator in question or by or on behalf of a person who is connected with him as aforesaid the appropriate initial treatment referred to in sub-paragraph (2)(a) of paragraph 2 above shall include the treatment to which it has been so subjected. (3) Where the initial treatment mentioned in sub-paragraph (2) above includes treatment in order to separate gas of one or more kinds which are transported and sold in normal commercial practice, the market value of the gas of each such kind which is separated shall be ascertained in accordance with sub-paragraphs (1) and (2) of paragraph 2 as if that were the only oil whose market value fell to be ascertained at the time in question (with sub-paragraph (2)(b) of paragraph 2 applying accordingly.) (4) Where the oil consists of or includes natural gas within the meaning of the Energy Act 1976, it shall be assumed for the purposes of paragraph 2— (a) that any consent given under section 8 or 9 of that Act for the supply or use of the gas applies to the supply of the gas under the contract mentioned in sub-paragraph (2) of that paragraph and to the use of the gas supplied under it; and (b) that no consent is required under those sections for that supply or use if no such consent would be required if that contract were in fact made by the participator in question.

• (8) Subject to the following provisions of this section, this section has effect—

• (a) as respects Part I of the Oil Taxation Act 1975, in relation to chargeable periods (within the meaning of that Part) ending after 31st December 1979; and

• (b) as respects Chapter V of Part XII of the Taxes Act 1988, in relation to chargeable periods (within the meaning of that Part) ending after that date.