Finance Act 1980

• (b) if shares in a subsidiary are transferred those shares must constitute the whole or substantially the whole of the distributing company's holding of the ordinary share capital of the subsidiary and must confer the whole or substantially the whole of the distributing company's voting rights in the subsidiary;

• (c) the only or main activity of the transferee company or each transferee company after the distribution must be the carrying on of the trade or the holding of the shares transferred to it;

• (d) the shares issued by the transferee company or each transferee company must not be redeemable, must constitute the whole or substantially the whole of its issued ordinary share capital and must confer the whole or substantially the whole of the voting rights in that company ; and

• (e) subject to sub-paragraph (2) and paragraph 8(b) below, the distributing company must after the distribution be either a trading company or the holding company of a trading group.

• (2) Sub-paragraph (1)(e) above does not apply if there are two or more transferee companies each of which has a trade or shares in a separate 75 per cent, subsidiary of the distributing company transferred to it and the distributing company is dissolved without there having been after the distribution any net assets of the company available for distribution in a winding up or otherwise.

7

• (1) The distribution must be made wholly or mainly for the purpose of benefiting some or all of the trading activities which before the distribution are carried on by a single company or group and after the distribution will be carried on by two or more companies or groups.

• (2) The distribution must not form part of a scheme or arrangements the main purpose or one of the main purposes of which is—

• (a) the avoidance of tax ; or

• (b) without prejudice to paragraph (a) above, the making of a chargeable payment as defined in paragraph 13 below or what would be such a payment if any of the companies mentioned in that paragraph were an unquoted company; or

• (c) the acquisition by any person or persons other than members of the distributing company of control of that company, of any other relevant company or of any company which belongs to the same group as any such company; or

• (d) the cessation of a trade or its sale after the distribution.

8

Where the distributing company is a 75 per cent, subsidiary of another company—

• (a) the group (or, if more than one, the largest group) to which the distributing company belongs at the time of the distribution must be a trading group ;

• (b) paragraphs 5(1)(b) and 6(1)(e) above shall not apply; and

• (c) the distribution must be followed by one or more other distributions falling within paragraph 2(1)(a) or (b)(ii) above which satisfy the conditions of this Part of this Schedule and result in members of the holding company of the group (or, if more than one, the largest group) to which the distributing company belonged at the time of the distribution becoming members of—

• (i) the transferee company or each transferee company to which a trade was transferred by the distributing company ; or

• (ii) the subsidiary or each subsidiary whose shares were transferred by the distributing company; or

• (iii) a company (other than that holding company) of which the company or companies mentioned in subparagraph (i) or (ii) above are 75 per cent, subsidiaries.

Part II — Relief From Tax in Respect of Capital Gains

9

Where a company makes an exempt distribution which falls within Section 213(3)(a) of the Taxes Act 1988

• (a) the distribution shall not be a capital distribution for the purposes of section 72 of the Capital Gains Tax Act 1979 (disposal on receipt of capital distribution); and

• (b) sections 77 to 81 of that Act shall, with the necessary modifications, apply as if that company and the subsidiary whose shares are transferred were the same company and the distribution were a reorganisation of its share capital.

10

Subject to paragraph 15 below, neither section 278 nor section 279 of the Taxes Act (charge of tax where company ceases to be a member of a group) shall apply in a case where a company ceases to be a member of a group by reason only of an exempt distribution.

Part III — Relief From Development Land Tax

11

Subject to paragraph 16 below, section 21 of the Development Land Tax Act 1976 (chargeable disposal where company ceases to be a member of a group) shall not apply where a company ceases to be a member of a group by reason only of an exempt distribution.

Part IV

12

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

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

Part V — Prevention of Tax Avoidance

Chargeable payments

13

Tax on chargeable payments

14

If within five years after the making of an exempt distribution there is a chargeable payment—

• (a) the amount or value of the payment shall be treated as income chargeable to tax under Case VI of Schedule D ; and

• (b) unless the payment is a transfer of money's worth, section 53 of the Taxes Act (deduction of income tax at source) shall apply to the payment as if it were an annual sum payable otherwise than out of profits or gains charged to income tax ;

• (c) the payment shall be regarded as a distribution for the purposes of sections 248(2) and 251(2) of the Taxes Act (disallowance of deductions) and paragraphs 5(6) and 10(1) of Schedule 16 to the Finance Act 1972 (close companies); and

• (d) the payment shall not (if it otherwise would be) be treated as a repayment of capital for the purposes of section 234 or 235 of the Taxes Act.

Re-instatement of charge in respect of capital gains

15

Paragraph 10 above does not apply if within five years after the making of the exempt distribution there is chargeable payment; and the time for making an assessment under section 278 or 279 of the Taxes Act by virtue of this paragraph shall not expire before the end of three years after the making of the chargeable payment.

Re-instatement of development land tax charge

16

Paragraph 11 above does not apply if within five years after the making of the exempt distribution there is a chargeable payment; and the time for making an assessment under section 21 of the Development Land Tax Act 1976 by virtue of this paragraph shall not expire before the end of three years after the making of the chargeable payment.

Part VI

Clearance procedure

17–22

18

• (1) Any application under paragraph 17 above shall be in writing and shall contain particulars of the relevant transactions and the Board may, within thirty days of the receipt of the application or of any further particulars previously required under this sub-paragraph, by notice require the applicant to furnish further particulars for the purpose of enabling the Board to make their decision ; and if any such notice is not complied with within thirty days or such longer period as the Board may allow, the Board need not proceed further on the application.

• (2) The Board shall notify their decision to the applicant within thirty days of receiving the application or, if they give a notice under sub-paragraph (1) above, within thirty days of the notice being complied with.

• (3) If the Board notify the applicant that they are not satisfied as mentioned in paragraph 17 above or do not notify their decision to the applicant within the time required by sub-paragraph (2) above, the applicant may within thirty days of the notification or of that time require the Board to transmit the application, together with any notice given and further particulars furnished under subparagraph (1) above, to the Special Commissioners ; and in that event any notification by the Special Commissioners shall have effect for the purposes of paragraph 17 above as if it were a notification by the Board.

• (4) If any particulars furnished under this paragraph do not fully and accurately disclose all facts and circumstances material for the decision of the Board or the Special Commissioners, any resulting notification that the Board or Commissioners are satisfied as mentioned in paragraph 17 above shall be void.

Returns

19

Where a company makes an exempt distribution it shall within thirty days after the distribution make a return to the inspector giving particulars of the distribution and of the circumstances by reason of which it is exempt

20

• (1) Where within five years after the making of an exempt distribution a person makes a chargeable payment which consists of a transfer of money's worth, he shall within thirty days after the transfer make a return to the inspector giving particulars—

• (a) of the transaction effecting the transfer;

• (b) of the name and address of the recipient or each recipient and the value of what is transferred to him or each of them; and

• (c) if the transfer is accompanied by a chargeable payment consisting of a payment of money, of that payment.

• (2) Subject to sub-paragraph (3) below, where within five years after the making of an exempt distribution a person makes a payment or a transfer of money's worth which would be a chargeable payment but for the fact that it is made for bona fide commercial reasons and does not form part of any such scheme or arrangements as are mentioned in paragraph 13(1) above, the person making the payment or transfer shall within thirty days after the payment or transfer make a return to the inspector giving particulars—

• (a) in the case of a transfer, of the transaction by which it is effected;

• (b) of the name and address of the recipient or each recipient and the amount of the payment made, or the value of what is transferred, to him or each of them; and

• (c) of the circumstances by reason of which the payment or transfer is not a chargeable payment.

• (3) Sub-paragraph (2) above does not apply where the payment or transfer is one in relation to which a notification under paragraph 17(3) above has effect.

Power to obtain information

21

Where a distribution falling within paragraph 2 above has been made and the inspector has reason to believe that it may form part of any such scheme or arrangements as are mentioned in sub-paragraph (2) of paragraph 7 above, he may by a notice in writing require any relevant company or any person controlling any such company to furnish him within such time, not being less than thirty days, as may be specified in the notice with—

• (a) a declaration in writing stating whether or not, according to information which the company or that person has or can reasonably obtain, any such scheme or arrangements exist or have existed;

• (b) such other information as the inspector may reasonably require for the purposes of that sub-paragraph and the company or that person has or can reasonably obtain.

22

• (1) If the inspector has reason to believe that a person has not delivered an account or made a return which he is required to deliver or make by virtue of paragraph 14(b) or 20 above in respect of any payment or transfer, the inspector may by notice in writing require that person to furnish him within such time, not being less than thirty days, as may be specified in the notice with such information relating to the payment or transfer as the inspector may reasonably require for the purposes of Part V of this Schedule.

• (2) If the inspector has reason to believe that a payment or transfer has been made within five years after the making of an exempt distribution and that the payment or transfer is a chargeable payment by reason of the existence of any such scheme or arrangements as are mentioned in paragraph 13(2) above, he may by notice in writing require the person making the payment or transfer or, if that person is a company, any person controlling it to furnish him within such time, not being less than thirty days, as may be specified in the notice with—

• (a) a declaration in writing stating whether or not, according to information which that person has, or can reasonably obtain, any such scheme or arrangements exist or have existed;

• (b) such other information as the inspector may reasonably require for the purposes of Part V of this Schedule and that person has or can reasonably obtain.

• (3) Any recipient of a chargeable payment and any person on whose behalf such a payment is received shall, if so required by the inspector, state whether the payment received by him or on his behalf is received on behalf of any person other than himself and, if so, the name and address of that person.

Part VII — Interpretation

23

• (1) In this Schedule—

• “chargeable payment” has the meaning given in Section 214(2) of the Taxes Act 1988;

• . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• “exempt distribution” means a distribution which is exempt by virtue of Section 213(2) of that Act;

• “group”, , means a company which has one or more 75 per cent. subsidiaries together with that or those subsidiaries ;

• . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• “shares” includes stock;

• . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (2) In determining for the purposes of paragraphs 2 to 6 above whether a company whose shares are transferred by the distributing company is a 75 per cent. subsidiary of the distributing company there shall be disregarded any share capital of the first-mentioned company which is owned indirectly by the distributing company.

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

• (4) Section 533 of the Taxes Act (meaning of connected persons) applies for the purposes of this Schedule.

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

SCHEDULE 19

Payments to National Loans Fund

1

• (1) There shall be paid into the National Loans Fund by the Director of Savings an amount equal to the sums which at the end of 1980 are held by him in respect of investment deposits or are so held to his account otherwise than by the National Debt Commissioners (hereinafter referred to as “the Commissioners”).

• (2) There shall be paid in to that Fund by the Commissioners an amount equal to the sums which at the end of 1980 are held by them or to their account and were paid to them under section 22 of the National Savings Bank Act 1971 or received by them in respect of the investments held by them under that section at the end of that year (hereinafter referred to as “the residual investments”).

• (3) The amounts referred to in this paragraph shall be determined by agreement between the Director of Savings, the Commissioners and the Treasury and certified by the Comptroller and Auditor General.

Liability to National Loans Fund

2

• (1) The Commissioners shall on 1st January 1981 assume a liability to the National Loans Fund of an amount equal to the excess of—

• (a) the sums charged on the Fund on that date by virtue of section 120 of this Act, over

• (b) the aggregate of the amounts required to be paid into the Fund under paragraph 1 above.

• (2) The amount of the liability shall be determined by agreement between the Director of Savings, the Commissioners and the Treasury and certified by the Comptroller and Auditor General.

Discharge of liability

3

• (1) The Commissioners shall discharge their liability under paragraph 2 above—

• (a) by paying into the Fund any interest on the residual investment which is received by them after the end of 1980 in respect of periods before the end of that year ;

• (b) by paying into the Fund from time to time in accordance with directions given by the Treasury any sums received by them on the redemption of any of those investments ;

• (c) by selling any of those invstments at such time and in such manner as the Treasury may direct and paying the proceeds into the Fund.

• (2) If all the residual investments have been redeemed or sold but the liability has not been fully discharged under sub-paragraph (1) above, the sum required for discharging the balance shall be issued to the Commissioners out of the Consolidated Fund and paid by them into the National Loans Fund.

• (3) If any of the residual investments remain after the liability has been fully discharged any interest received by the Commissioners in respect of those investments shall be paid into the Consolidated Fund and the Treasury may direct that any sums received on the redemption of the investments shall be paid into that Fund or that any of the investments shall be sold in such a manner as the Treasury may specify and the proceeds paid into that Fund.

Interest on residual investments

4

Subject to paragraph 3(3) above, the Commissioners shall pay into the National Loans Fund any interest on the residual investment received by them in respect of periods after the end of 1980.

Re-investment

5

• (1) Subject to paragraphs 3 and 4 above, the Commissioners may, if the Treasury so direct, re-invest any sums received by them in respect of the residual investments (whether on redemption or as proceeds of sale) and this Schedule shall apply to the resulting investments as if they were included in the residual investments.

• (2) Any sums to be re-invested shall be re-invested, in accordance with any directions given by the Treasury, ina ny such manner for the time being specified in Part II of Schedule 1 to the Trustee Investments Act 1961 as the Treasury may by order specify.

• (3) A draft of any statutory instrument containing an order under this paragraph shall be liad before Parliament.

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

• (5) Any order in force under the said section 22(1) at the end of 1980 shall have effect as if made under this paragraph and the provisions amended by sub-paragraph (4) above.

Expenses

6

The expenses of the Commissioenrs in connection with the residual investments (as agreed between them and the Treasury) shall be deducted in accordance with directions given by the Treasury from the sums payable by the Commissioners under paragraphs 3 and 4 above.

Accounts

7

• (1) The Commissioners shall keep an account of all sums received and paid by them after the end of 1980 in respect of the residual investments and of the re-investments made by them after the end of that year and shall furnish to the Treasury such information relating to the investment as the Treasury may require.

• (2) The Commissioners shall prepare, as respects each year ending with 31st December, a statement of the account referred to in sub-paragraph (1) above and that statement shall, before the end of May next following the expiration of that year, be transmitted to the Comptroller and Auditor General who shall examine, certify and report on it and lay copies of it, together with copies of his report, before Parliament.

SCHEDULE 20

Part I — Gaming Licence Duty

Part II — Gaming Machine Licence Duty

Part III — Other Excise Duties

Part IV — Value Added Tax

Part V — Abolition of Lower Rate

Part VI — Child Tax Allowances

Section A

Section B

Part VII — Retirement Annuities

Part VIII — Close Companies

Part IX — Income Tax and Corporation Tax: Miscellaneous

Part X — Capital Gains

Part XI — Capital Transfer Tax

Part XII — Stamp Duty

Part XIII — Petroleum Revenue Tax

Part XIV — Development Land Tax

Part XV — National Savings Bank

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

Shared ownership transactions.

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

Interest on unpaid tax.

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

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

Advance payments of tax.

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

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

Enforcement

SCHEDULE 7. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SCHEDULES 8–11

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

Exploration and appraisal expenditure

16A

In relation to exploration and appraisal expenditure to which section 5A applies, paragraph 16 above has effect as if any reference therein to section 5 were a reference to section 5A.

Research expenditure

16B

In relation to research expenditure to which section 5B applies, paragraph 16 above has effect as if any reference therein to section 5 were a reference to section 5B.

The repeal of paragraph 4 of Schedule 2 to the Betting and Gaming Duties Act 1972 does not affect licences for periods beginning before 1st October 1980 and the other repeals do not affect licences for periods beginning before 1st October 1981.

1

The repeal in the Finance (No. 2) Act 1975 has effect from 29th September 1980.

2

The repeals in the Finance Act 1977 do not affect licences taken out before 27th March 1980.

1

The repeal of section 414(1)(b) of the Income and Corporation Taxes Act 1970 applies in relation to interest for periods after 20th November 1979.

2

The repeal in the Finance Act 1974 has effect in relation to interest paid after 26th March 1980.

3

The repeal of section 46(3)(a) of the Finance (No. 2) Act 1975 does not affect interest on tax charged by assessments notice of which was issued before the passing of this Act.

4

The repeal of section 51 of the Finance (No. 2) Act 1975 has effect in relation to income or gains which are applicable and applied for provident benefits on or after 1st June 1980.

5

The repeals in the Finance Act 1976 and the Finance Act 1977 have effect for the year 1981–82 and subsequent years of assessment.

1

The repeal of paragraph 8 of Schedule 2 to the Development Land Tax Act 1976 does not affect realised development value accruing on a disposal before 26th March 1980.

2

The other repeals do not affect any disposal before 6th August 1980.

Editorial notes