Finance Act 1981

references to expenditure qualifying for supplement shall include references to expenditure that would so qualify apart from this section; but the responsible person need not make a claim under paragraph 2(4)(a) of the said Schedule 5 if it appears to him that none of the expenditure is likely to qualify because of this section.

• (7) This section applies whether the net profit period ends before or after the passing of this Act but subsection (1) above shall not disqualify any expenditure which was incurred before 1st January 1981 or which is incurred before 1st January 1983 in pursuance of a contract entered into before 1st January 1981.

Restriction of expenditure supplement: transfers of interests

112

• (1) Section 111 above shall have effect in accordance with this section where a participator in an oil field has acquired the whole or part of his interest in the field as a result of one or more transfers to him within the meaning of Schedule 17 to the Finance Act 1980, and in this section “the new participator and the “the old participator” mean respectively the first-mentioned participator and any participator from whom he has acquired the whole or part of his interest.

• (2) The new participator’s net profit period shall be whichever is the earlier of—

• (a) his own net profit period as determined in accordance with section 111 above and subsections (3) and (4) below; or

• (b) subject to subsection (5) below, the chargeable period which is the net profit period of the old participator or, if there are two or more old participators, of whichever of them has the earliest net profit period.

• (3) Where the old participator has transferred the whole of his interest in the field to the new participator, the net profit period of the new participator shall be determined by treating as if they were his the total assessable profits and allowable losses of the old participator as determined for the purposes of section 111 above.

• (4) Where the old participator has transferred part of his interest in the field to the new participator, the net profit period of the old and new participators shall be determined by treating as if they were the new participator’s and not the old participator’s such part of the total assessable profits and allowable losses of the old participator (as determined for the purposes of section 111 above) as may be just and reasonable.

• (4A) Subsections (2) and (2A) of section 111 shall have effect as if references to the amount of advance petroleum revenue tax paid by the new participator or repaid to him included references to the amount of that tax paid by or repaid to the old participator or, where the old participator has transferred part of his interest, such part of that amount as is just and reasonable.

• (5) The net profit period of an old participator shall not be taken into account under subsection (2)(b) above if the new participator’s own net profit period, as determined without reference under subsection (3) or (4) above to the old participator’s assessable profits or allowable losses, fell before the chargeable period in which the new participator acquired the whole or part of the old participator’s interest.

Restriction of expenditure supplement: loss following net profit period

113

• (1) This section has effect where the aggregate of—

• (a) the total allowable losses that have accrued to a participator from an oil field in chargeable periods up to and including a chargeable period ending not more than three years after his net profit period, and

• (b) the amount of advance petroleum revenue tax paid by him in respect of that field for those periods less any such tax repaid to him before the end of those periods or repaid subsequently under section 142(1) of the Finance Act 1982 or paragraph 9 of Schedule 19 to that Act,

exceeds the total assessable profits (without any reduction under section 7 or 8 of the principal Act) that have so accrued to him.

• (2) Section 111(1) above shall not disqualify for supplement under section 2(9)(b)(ii) or (c)(ii) of the principal Act expenditure which is incurred up to the end of—

• (a) the last chargeable period in the three years mentioned in subsection (1) above; or

• (b) the chargeable period in which a net profit next accrues to the participator from the field after the chargeable period mentioned in that subsection,

whichever is the earlier.

• (3) Subsection (3) of section 111 above shall apply for the purposes of subsection (1) above as it applies for the purposes of subsection (2) of that section and subsections (3), (4) and (5) of that section shall apply for the purposes of subsection (2)(b) above as they apply for the purposes of subsection (2) of that section.

Restriction of limit on amount of tax payable

114

• (1) For section 9 of the principal Act (annual limit on amount of tax payable by participator) there shall be substituted—

(9) (1) The tax payable by a participator in an oil field for any chargeable period to which this subsection applies shall not exceed 80 per cent. of the amount (if any) by which his adjusted profit for that period (as defined in this section) exceeds 15 per cent. of his accumulated capital expenditure at the end of that period (as so defined). (1A) Subsection (1) above applies to— (a) any chargeable period from the first chargeable period up to and including the period which is the participator’s net profit period for the field for the purposes of section 111 of the Finance Act 1981 or where section 113 of that Act applies, up to and including the earlier of the periods mentioned in subsection (2) of that section; and (b) any subsequent chargeable period up to such number of periods as is equal to half the number of chargeable periods included in paragraph (a) above (counting any resulting fraction of a period as a whole period). (2) The adjusted profit of a participator in an oil field for any chargeable period shall be determined as follows— (a) there shall be ascertained— (i) the assessable profit (without any reduction under section 7 or 8 of this Act) or allowable loss accruing to him in that period; and (ii) the total amount taken into account under section 2(9)(b), (c), (d) and (e) of this Act in computing that profit or loss, excluding expenditure so taken into account under section 2(9)(b)(i) or (c)(i) which was not allowed as qualifying for supplement under section 2(9)(b)(ii) or (c)(ii); (b) if there is a profit under paragraph (a)(i) above, the sum of that profit and the total ascertained under paragraph (a)(ii) above is his adjusted profit for the period; (c) if there is a 1oss under paragraph (a)(i) above smaller than the total ascertained under paragraph (a)(ii) above, the difference is his adjusted profit for the period. (3) The accumulated capital expenditure of a participator in an oil field at the end of any chargeable period is the total amount of expenditure taken into account under section 2(9)(b)(i) and (c)(i) of this Act in computing the assessable profit or allowable loss accruing to him in that period and all earlier chargeable periods excluding all expenditure so taken into account which was not allowed as qualifying for supplement under section 2(9)(b)(ii) or (c)(ii). (4) Where a participator has made an election under paragraph 9(1) of Schedule 3 to this Act the amount of any reduction by virtue of this section in the tax payable by him for any chargeable period shall not be greater than it would have been if he had not made any such election and for the purposes of subsection (3) above his accumulated capital expenditure at the end of any chargeable period shall be taken to be what it would have been if he had made no such election.

• (2) In consequence of subsection (1) above, Schedule 17 to the Finance Act 1980 (transfers of interests in oil fields) shall be amended as follows—

• (a) in paragraph 1(3) for the words from “the transfer period” onwards there shall be substituted the words “ “the transfer period” means the chargeable period in which the transfer takes place ”;

• (b) in paragraph 8(1) for the words from “the last calendar year” onwards there shall be substituted “ the last chargeable period before the transfer period ”;

• (c) in paragraph 8(2) for the words “year” (in both places) and “calendar years” there shall be substituted respectively the words “ period ” and “ chargeable periods ”;

• (d) in paragraph 18 for the word “year”, wherever it occurs, there shall be substituted the word “ period ”.

• (3) This section applies whether the net profit period ends before or after the passing of this Act.

Contracts with deferred payment

115

• (1) Expenditure incurred in pursuance of a contract to which this section applies shall not qualify for supplement under section 2(9)(b)(ii) or (c)(ii) of the principal Act.

• (2) This section applies to any contract which is entered into after 1st July 1980 unless—

• (a) the amount required to be paid under it by the person incurring the expenditure is less than £10 million; or

• (b) it is reasonable to expect, at the time when the contract is entered into—

• (i) that not less than 90 per cent. of that amount be paid within nine months of the date on which the other party begins to perform the contract; or

• (ii) that a payment or payments in respect of that amount will be made which comply with subsection (3) below;

and for the purposes of paragraph (a) above there may be disregarded any provision of the contract allowing for variations in the amount payable to take account of changes in costs or design.

• (3) The payment or payments referred to in subsection (2)(b)(ii) above must be such that the amount to be paid up to any time after the date on which the other party to the contract begins to perform it is equal to not less than 75 per cent. of the amount that would have become payable up to that time if—

• (a) the payments required to be made under the contract were such that the first of them was payable within six months after that date and each subsequent one within six months after the previous one; and

• (b) the first of the payments were required to be of an amount proportionate to the extent to which the contract has been performed by that party since that date and each subsequent one to be of an amount proportionate to the extent to which the contract has been so performed since the previous payment was required to be made.

• (4) Where a contract requires a payment in respect of any period or in respect of the completion of any stage in the performance of the contract to be made within three months after the end of that period or within three months after the completion of that stage the amount to be paid up to any time shall be determined for the purposes of subsection (3) above as if the payment were required to be made at the end of that period or on completion of that stage.

• (5) Where a contract provides for payments in respect of the completion of stages in the performance of separate parts of the work specified in the contract, the payments under the contract shall be treated as complying with subsection (3) above if the payments attributable to each part of the contract would have complied with that subsection if that part had been the subject of a separate contract.

Spreading of capital expenditure

116

• (1) For paragraph 9 of Schedule 3 to the principal Act (spreading of capital expenditure) there shall be substituted—

(9) (1) A participator in an oil field may by notice in writing to the Board elect— (a) that the relief for supplemented expenditure to be taken into account in computing the assessable profit or allowable loss accruing to him from the field in the chargeable period specified in the notice shall not exceed such amount as is so specified; and (b) that any excess shall be dealt with in accordance with the following provisions of this paragraph. (2) Subject to sub-paragraphs (3) and (4) below, one-twentieth of any excess of the relief over the amount specified for the chargeable period in question shall be taken into account in computing the assessable profit or allowable loss accruing to the participator from the field in each of the next twenty chargeable periods. (3) A participator may, in the first notice given by him under sub-paragraph (1) above in respect of a field, elect that sub-paragraph (2) above shall have effect in relation to that and any subsequent notice given by him in respect of that field with the substitution for the denominator of the fraction and the number of chargeable periods of such number, being three, five, ten or fifteen, as is specified in the election. (4) A participator may by a notice in writing given to the Board and applying to any of the chargeable periods referred to in sub-paragraph (2) above before the last elect that so much of the excess as has not been taken into account in a previous chargeable period shall be taken into account in the period specified in the notice instead of partly in that period and partly in the subsequent periods. (5) Any notice under this paragraph shall be in such form as the Board may prescribe and shall be given within three months after the end of the chargeable period to which it relates or, if later, twenty-seven months after the end of the first chargeable period of the field. (6) Any tax charged or repayable in respect of the first four chargeable periods of an oil field in consequence of an election under this paragraph shall not carry interest under paragraph 15 or 16 of Schedule 2 to this Act in respect of any period before the date of the election. (7) In this paragraph “relief for supplemental expenditure” means the amount attributable to expenditure qualifying for supplement under paragraph (b)(ii) or (c)(ii) of section 2(9) of this Act which would, apart from any election under this paragraph, fall to be taken into account under paragraph (b) or (c) of section 2(9) in computing the assessable profit or allowable loss accruing to the participator from the field in the chargeable period in question; and the reference in this sub-paragraph to the amount attributable to expenditure qualifying for supplement as aforesaid includes the amount attributable to the expenditure itself as well as to the amount calculated by reference to it under the said paragraph (b)(ii) or (c)(ii).

• (2) For paragraph 10 of Schedule 3 to the principal Act there shall be substituted—

(10) Where a participator has made an election under paragraph 9(1) above the reduction to be made in his case under section 8(1) of this Act for any chargeable period (whether or not that to which the election relates) shall not be greater than it would have been if he had made no such election.

• (3) This section has effect in relation to any chargeable period ending after 31st December 1979.

Spreading of capital expenditure: transitional provisions

117

• (1) Where allowable losses have accrued to a participator from an oil field in chargeable periods ending before 1st January 1980 he may by notice in writing given to the Board elect that so much of those losses as would, apart from this section, be available for set off under section 7 of the principal Act against assessable profits accruing to him from the field in chargeable periods beginning on or after that date shall instead be treated as an amount of relief for supplemented expenditure which, subject to any election under paragraph 9 of Schedule 3 to that Act, falls to be taken into account in computing the assessable profit or allowable loss accruing to him from the field in the chargeable period ending on 30th June 1980.

• (2) The amount to which an election under this section applies shall not exceed the total amount of relief for supplemented expenditure taken into account in computing the assessable profits or allowable losses accruing to the participator in chargeable periods ending before 1st January 1980.

• (3) Any notice under this section shall be in such form as the Board may prescribe and shall be given before 1st April 1982; and—

• (a) any notice under paragraph 9 of Schedule 3 to the principal Act in respect of a chargeable period ending before that date shall not be out of time if given before that date;

• (b) any tax charged or repayable in respect of any such chargeable period in consequence of an election under that paragraph shall not carry interest under paragraph 15 or 16 of Schedule 2 to that Act in respect of any period before the date of the election.

• (4) In section 111(3)(b) above and in section 9(4) of, and paragraph 10 of Schedule 3 to, the principal Act references to an election under paragraph 9(1) of that Schedule shall include references to an election under this section.

• (5) This section shall be construed as one with Part I of the principal Act and paragraph 9(7) of Schedule 3 to that Act shall apply for the interpretation of subsections (1) and (2) above.

Licence payments other than royalties

118

• (1) For the purpose of computing under section 2 of the principal Act the assessable profit or allowable loss accruing to a participator in any chargeable period from an oil field—

• (a) there shall be included as a positive amount any chargeable sum paid to the participator in the period by the Secretary of State or the OGA ; and

• (b) there shall be included as a negative amount any allowable sum paid by the participator in the period to the OGA .

• (2) In this section “chargeable sum” and “allowable sum” mean any sum which after 31st December 1980 is paid to a participator by the Secretary of State or the OGA or, as the case may be, by the participator to the OGA by reference to a relevant licence except—

• (a) any sum falling to be taken into account under section 2(6) of the principal Act (licence debit or credit) or section 3(1)(b) of that Act (payment under or for the purpose of obtaining a relevant licence);

• (b) any sum consisting of interest on a sum payable to or by the OGA ;

• (c) any repayment by the Secretary of State under section 6(1) of the Petroleum Act 1998 (repayment of royalty for facilitating or maintaining the development of United Kingdom petroleum resources); and

• (d) any payment or repayment of royalty in respect of excluded oil (as defined in section 10 of the principal Act) and any other payment attributable to such oil.

• (3) Where the relevent licence by reference to which a chargeable sum or allowable sum is paid relates to a licensed area comprising the whole or part of two or more oil fields, that sum shall for the purposes of this section be apportioned between all or any of those fields, or attributed wholly to one of them, as may be just and reasonable.

• (4) A return under paragraph 2 of Schedule 2 to the principal Act shall include a statement of the chargeable sums and allowable sums, if any, paid to or by the participator in the chargeable period to which the return relates.

• (5) In considering for the purposes of paragraph 8(1) of Schedule 3 to the principal Act (subsidised expenditure) how far any expenditure has been or is to be met directly or indirectly by the Crown or by any authority or person other than the person incurring the expenditure, any chargeable sum shall be left out of account.

• (6) This section shall be construed as one with Part I of the principal Act.

Transportation costs for off-shore oil

119

• (1) In section 3(4)(c) of the principal Act (buildings and structures eligible for expenditure relief) after paragraph (iii) there shall be inserted—

(iv) a building or structure used or to be used for transporting such oil as is mentioned in subsection (1)(f) above from the place where it is first landed in the United Kingdom to the place in the United Kingdom at which the seller in a sale at arm’s length could reasonably be expected to deliver it or, if there is more than one place at which he could reasonably be expected to deliver it, the one nearest to the place of extraction; or

.

• (2) This section shall have effect in relation to any expenditure in respect of which a claim is made after 31st December 1978.

Deduction of petroleum revenue tax in computing income for corporation tax

120

Gas banking schemes

121

Regulation under section 108 of the Finance Act 1980 (gas banking schemes) may provide for the modifications made by them to have effect from a date before the regulations are made and for any election made under that section to have effect from a date before the election is made.

Part VIII — Supplementary Petroleum Duty

Charge of supplementary petroleum duty

122

• (1) Every participator in an oilfield shall, in accordance with this Part of this Act, be chargeable with a tax (to be known as supplementary petroleum duty) on the gross profit accruing to him from the field in any chargeable period to which this section applies.

• (2) The duty shall be charged at the rate of 20 per cent.

• (3) For the purposes of the duty the gross profit shall, except so far as otherwise provided in this Part of this Act, be determined in accordance with section 2(4) to (5A) of the Oil Taxation Act 1975 (“the principal Act”) as for the purposes of petroleum revenue tax.

• (4) Any other expression used in this Part of this Act which also occurs in Part I of the principal Act shall be construed in the same way as for the purposes of that tax.

• (5) This section applies to the chargeable periods ending on 30th June 1981, 31st December 1981, 30th June 1982, and 31st December 1982 and to no other periods.

Increase of gross profit by reference to royalties in kind

123

• (1) This section applies where part of a participator’s share of the oil won and saved from an oil field is delivered by him in a chargeable period to the Secretary of State pursuant to a requirement imposed under the terms of a licence granted under the Petroleum (Production) Act 1934.

• (2) In determining for the purposes of the duty the gross profit accruing to the participator from the field in the chargeable period the aggregate of the amounts mentioned in section 2(5)(a), (b) and (c) of the principal Act shall be increased by multiplying it by a fraction of which—

• (a) the numerator is the total of the quantity of oil won from the field which is delivered or relevantly appropriated by him in the period including the oil delivered to the Secretary of State; and

• (b) the denominator is that total excluding the oil delivered to the Secretary of State.

• (3) Where oil is delivered pursuant to a requirement which relates to oil of one or more kinds but not to others, subsection (2) above shall apply only in relation to oil of the kind or kinds to which the requirement relates; and where oil is delivered pursuant to a requirement which specifies different proportions in relation to different kinds of oil, that subsection shall apply separately in relation to each of those kinds.

• (4) For the purposes of section 2(5) of the principal Act as applied by this Part of this Act the exclusion by paragraph 4 of Schedule 3 to that Act of oil delivered to the Secretary of State under the terms of a licence granted under the said Act of 1934 shall be deemed to extend to oil which is inadvertently delivered to him in excess of the amount required; and oil so delivered shall be treated for the purposes of this section as delivered pursuant to a requirement imposed under the terms of such a licence.

Reduction of gross profit by reference to exempt allowance

124

• (1) For the purposes of the duty there shall be for each oilfield in each chargeable period an exempt allowance of 500,000 metric tonnes of oil divided between the participators in shares proportionate to their shares of the oil won and saved from the field during the period.

• (2) If the gross profit accruing to a participtor in a chargeable period from a field exceeds the cash equivalent of his share of the exempt allowance, the gross profit shall be reduced to an amount equal to the excess.

• (3) If the gross profit accruing to a participator in a chargeable period from a field does not exceed the cash equivalent of his share of the exempt allowance, the gross profit shall be reduced to nil.

• (4) Subject to subsection (5) below, the cash equivalent of a participator’s share of the exempt allowance for an oil field for a chargeable period shall be equal to such proportion of the gross profit accruing to him from the field in that period (before any reduction under this section) as his share of the exempt allowance bears to his share, exclusive of excluded oil within the meaning of section 10 of the principal Act, of the oil won and saved from the field during the period.

• (5) If a participator in an oil field so elects by notice in writing given to the Board at the time when he makes his return under paragraph 2 of Schedule 2 to the principal Act for a chargeable period, the cash equivalent of his share of the exempt allowance for the field for that period shall be determined under subsection (4) above—

• (a) to the extent that his share of that exempt allowance does not exceed his share of the oil (other than gas) won and saved from the field in the period, as if in computing the gross profit accruing to him in the period all amounts relating to gas fell to be disregarded; and

• (b) to the extent, if any, that his share of that allowance exceeds his share of the oil (other than gas) so won and saved, as if in computing the gross profit so accruing all amounts relating to oil other than gas fell to be disregarded.

• (6) In this section references to a participator’s share of the oil won and saved from a field are to his share as expressed in metric tonnes and for that purpose 1,100 cubic metres of oil consisting of gas at a temperature of 15 degrees centigrade and pressure of one atmosphere shall be counted as equivalent to one metric tonne of oil other than gas.

Repayment of duty in case of field showing net loss on cessation

125

• (1) Subject to the provisions of this section, the duty paid by a participator in respect of an oil field shall be repaid to him if—

• (a) a decision has been made under Schedule 8 to the principal Act (whether by the Board or on appeal) that the winning of oil from the field has permanently ceased;

• (b) an unrelievable field loss, within the meaning of section 6 of that Act, has accrued to the participator from the field; and

• (c) a claim for repayment is made under this section.

• (2) The amount of duty to be repaid shall not exceed the amount of the unrelievable field loss; and where duty paid by a participator in respect of an oil field is repaid under this section the amount to be taken into account under section 2(9)(e) of the principal Act as the unrelievable field loss from that field in computing the assessable profit or allowable loss accruing from another field to—

• (a) the participator; or

• (b) a company which, within the meaning of the said section 6, is associated with him in respect of the loss,

shall not be greater than the amount (if any) by which it exceeds the amount repaid.

• (3) If a claim for the allowance of the unrelievable field loss is made by the participator under Schedule 8 to the principal Act, the claim under this section shall be included in that claim; and in any other case the claim under this section shall be made within six years after the date of the decision mentioned in subsection (1)(a) above.

• (4) Sub-paragraphs (2) and (3) of paragraph 4 of the said Schedule 8 shall, with the necessary modifications, apply in relation to a claim for repayment under this section as they apply in relation to a claim under sub-paragraph (1) of that paragraph.

• (5) References in this section to duty paid by a participator are to duty paid by him and not previously repaid.

Deduction of duty in computing assessable profit or allowable loss for petroleum revenue tax

126

• (1) For the purpose of computing under section 2 of the principal Act the assessable profit or allowable loss accruing to a participator in any chargeable period from an oil field—

• (a) there shall be included as a negative amount his duty debit (if any) for the period; and

• (b) there shall be included as a positive amount his duty credit (if any) for the period.

• (2) The participator’s duty debit or credit (if any) for the period is the difference (if any) between—

• (a) the sum of the amounts mentioned in subsection (3) below; and

• (b) the sum of—

• (i) the amount taken into account under paragraph (a) of that subsection in computing his duty debit or credit for the preceding chargeable period; and

• (ii) the amount of any duty repaid to him in the period in respect of the field;

and their difference (if any) is a duty debit if the sum mentioned in paragraph (a) above is greater than the sum mentioned in paragraph (b) above, and is otherwise a duty credit.

• (3) The amounts referred to in subsection (2)(a) above are—

• (a) the amount shown in the statement delivered by the participator under sub-paragraph (1)(a) of paragraph 10 of Schedule 16 to this Act as the duty payable by him under that paragraph for the period in respect of the field; and

• (b) the amount of duty paid in the period in respect of the field for previous chargeable periods.

• (4) For the purposes of subsection (3)(b) above duty for a period which is paid before the end of that period shall be treated as paid in the next chargeable period.

• (5) Where a participator’s liability to petroleum revenue tax has been determined by reference to an amount of duty paid by him and there is a repayment of the duty which cannot be taken into account under the foregoing provisions of this section, an additional assessment to that tax may be made at any time not later than six years after the end of the chargeable period in which the duly is repaid.

• (6) Paragraph 12 of Schedule 17 to the Finance Act 1980 (treatment of royalty payments where there is a transfer of an interest in an oil field) shall apply in relation to any duty debit or credit as it applies in relation to a licence debit or credit, taking references to subsection (6) of section 2 of the principal Act and paragraphs (a) and (b) of that subsection as references to subsection (2) above and paragraphs (a) and (b) of that subsection.

Deduction of duty in computing income for corporation tax

127

• (1) Where a participator in an oilfield has paid any duty with which he was chargeable for a chargeable period, then, in computing for corporation tax the amount of his income arising in the relevant accounting period from oil extraction activities or oil rights, there shall be deducted an amount equal to that duty; and there shall be made all such adjustments of assessments to corporation tax as are required in order to give effect to this subsection.

• (2) For the Purposes of subsection (1) above the relevant accounting period, in relation to any duty paid by a company, is—

• (a) the accounting period of the company in or at the end of which the chargeable period for which the duty was charged ends; or

• (b) if that chargeable period ends after the accounting period of the company in or at the end of which the trade giving rise to the income referred to in subsection (1) above is permanently discontinued, that accounting period.

• (3) Subject to subsection (4) below, if some or all of the duty in respect of which a deduction has been made under subsection (1) above is subsequently repaid, that deduction shall be reduced or extinguished accordingly; and any additional assessment to corporation tax required in order to give effect to this subsection may be made at any time not later than six years after the end of the accounting period in which the duty was repaid.

• (4) Subsection (3) above does not apply to any repayment of duty under section 125 above but any amount of duty repaid to a person under that section shall be treated as his income for the purpose of corporation tax.

• (5) Where, because of a deduction made under subsection (1) above in computing for corporation tax the amount of a company’s income of any kind, the amount of advance corporation tax which can be set against the company’s liability to corporation tax for an accounting period is less than the amount of advance corporation tax which could have been set against that liability if the deduction had not been made, then, if a claim in that behalf is made by the company not later than two years after the end of that accounting period, an amount of advance corporation tax equal to the difference shall be repaid to the company.

• (6) In this section “oil extraction activities” and “oil rights” have the meaning given in section 19(1) of the principal Act.

Supplementary provisions

128

• (1) Schedule 16 to this Act shall have effect with respect to the management and collection of duty.

• (2) In section 1(1) of the Provisional Collection of Taxes Act 1968 after the words “petroleum revenue tax” there shall be inserted the words “ supplementary petroleum duty ”.

• (3) This Part of this Act shall be included in the Oil Taxation Acts for the purposes of section 108 of the Finance Act 1980 (gas banking schemes).

Part IX

Residential development of land held as stock in trade

129

Exemption for urban development corporations

130

In section 11(1) of the Development Land Tax Act 1976 (bodies totally exempt from development land tax) there shall be inserted after paragraph (g)—

(gg) an urban development corporation established under section 135 of the Local Government, Planning and Land Act 1980

.

Exemption for projects begun within three years of acquisition of land

131

• (1) In section 18 of the Development Land Tax Act 1976 (exemption for projects begun within three years of acquisition of land)—

• (a) at the end of paragraph (b) of subsection (2) there shall be inserted the words " assuming that the law at the time of the acquisition of the relevant interest had been the same as it was at the date when the project began "; and

• (b) at the end of subsection (3) there shall be inserted the words " ; and for the purposes of this subsection it shall be assumed that there will be no change in the law between the date of the application and the commencement of the project ".

• (2) Paragraph (a) of subsection (1) above has effect in relation to any disposal after 9th March 1981 and paragraph (b) in relation to any application made after that date.

Development for owner's use

132

• (1) After section 19 of the Development Land Tax Act 1976 there shall be inserted—

(19A) (1) Subject to section 20 below, where— (a) realised development value accrues to a chargeable person on the deemed disposal after 9th March 1981 and before 1st April 1984 of an interest in land (in this section referred to as " the relevant interest"); (b) the project of material development which gives rise to the deemed disposal relates to a building or other land to be used and occupied in whole or in part by the chargeable person; and (c) the development was authorised by planning permission which was in force when the project began, then, subject to the following provisions of this section, liability for development land tax on such proportion of that realised development value as is properly attributable to property to be so used and occupied shall be deferred until there is a disposal of the relevant interest in that property which does not fall within paragraph (i), (ii) or (iii) of section 19(1) above or subsection (2) below. (2) A disposal of the relevant interest falls within this subsection if— (a) it is a part disposal within the meaning of section 3(1)(a) above; (b) the lease or other interest ends not later than twelve months after the date of the disposal ; and (c) there is no other such disposal within twelve months after the end of the lease or other interest. (3) Where on the grant of a lease of any premises the premises become tied premises— (a) if the grant of the lease would not otherwise be a disposal falling within subsection (2) above, it shall be deemed to be so; (b) whether or not any other person is actually in occupation of the premises, the lessor shall be treated for the purposes of this section as if he himself occupies the premises during any period during which the premises are tied premises ; and (c) if at any time during the lease the premises cease to be tied premises and are not from that time occupied by the lessor, the relevant interest, or if subsection (1)(b) above applies to part only of the building or other land so much of the relevant interest as subsists in that part, shall be treated for the purposes only of subsection (1) above and section 27 below as having been disposed of at that time ; and for the purposes of this section premises subject to a lease are tied premises if they are tied premises within the meaning of section 140(2) of the Taxes Act in relation to the lessor and to a trade carried on by him. (4) In any case where it appears to the Board or, on an appeal, to the Commissioners concerned that a project of material development falling within subsection (1) above relates exclusively to property to be used and occupied by the chargeable person, the proportion of realised development value referred to in that subsection shall be 100 per cent, but in any other case— (a) the proportion properly attributable to the property to be so used and occupied, and (b) the method of apportionment adopted, shall be such as appears to the Board or, on an appeal, to the Commissioners concerned to be just and reasonable. (5) In determining for the purposes of subsection (1)(c) above whether the development was authorised by planning permission in force when the project began, only such development as at that time— (a) was authorised by that permission without any requirement as to subsequent approval, or (b) was not so authorised but had been approved in a manner applicable to that planning permission, shall for those purposes be taken to have been authorised by that permission at that time. (6) Subsections (7), (9) and (10) of section 19 above shall apply for the purposes of this section as they apply for the purposes of that section but with the substitution for the references to subsections (1) and (5) (a) of that section of references to subsections (1) and (2) above respectively. (7) If after a disposal falling within paragraph (iii) of subsection (1) of section 19 above there is a disposal of the lease referred to in paragraph (c) of subsection (7) of that section, subsection (1) above shall have effect as if at the time of the disposal of the lease there were a disposal of the relevant interest in so much of any building or other land as is the subject-matter of the lease.

.

• (2) In section 20 of that Act (groups of companies) after subsection (5) there shall be inserted—

(6) For the purposes of section 19A above, where the chargeable person is a member of a group of companies subsection (1)(b) of that section shall have effect as if the references to the chargeable person were references to any member of the group.

.

• (3) This section has effect in relation to any disposal after 9th March 1981.

Extensions

133

• (1) In paragraph 5(1)(a) of Schedule 4 to the Development Land Tax Act 1976 (exclusion from material development of works whereby cubic content of building is not exceeded by more than one-tenth) for " one-tenth " there shall be substituted " one-third ".

• (2) In paragraph 6(1) of that Schedule for the words " one-tenth " there shall be substituted the words " one-third or as the case may be one-tenth ".

• (3) This section has effect in relation to any disposal after 9th March 1981.

Part X — Miscellaneous and Supplementary

Special tax on banking deposits

134

• (1) Every person who on 10th March 1981 was carrying on a banking business in the United Kingdom shall be chargeable for the year beginning on 1st April 1981 with a tax (to be known as the special tax on banking deposits) if the average chargeable deposits held by him in the base period exceeded £15 million.

• (2) The amount of tax chargeable in the case of any person shall be equal to 2 per cent. of the excess referred to in subsection (1) above or, if the excess is more than £200 million, the aggregate of 2 per cent. of the first £200 million and 2½ per cent. of the remainder.

• (3) Part I of Schedule 17 to this Act shall have effect for determining the base period and the chargeable deposits held by a person in that period; and Part II of that Schedule shall have effect with respect to the management and collection of the tax.

• (4) The tax paid by a person shall not be deductible in computing his income, profits or losses for the purposes of income tax or corporation tax.

• (5) In this section and Schedule 17 references to a person carrying on a banking business do not include references to the Bank of England or the central bank of any country outside the United Kingdom.

Chevening Estate

135

• (1) The enactments relating to . . . capital transfer tax shall not apply in respect of property held on the trusts of the trust instrument set out in the Schedule to Chevening Estate Act 1959.

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

Exchange control

136

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

• (2) In section 2(1) of the Banking and Financial Dealings Act 1971 (power to suspend financial dealings)—

• (a) in paragraph (b) for the words “no authorised dealer in foreign currency”, and

• (b) in paragraph (c) for the words “no authorised dealer in gold”,

there shall be substituted the words “ no person ”.

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

Irish Land Acts

137

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

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

• (3) Any sums required to be paid under subsection (7) of section 16 of the National Loans Act 1968 in respect of the management of securities issued under the Northern Ireland Land Act 1925 shall be met out of the National Loans Fund with recourse to the Consolidated Fund.

• (4) This section shall come into force on 1st April 1982.

Penalties

138

Short title, interpretation, construction and repeals

139

• (1) This Act may be cited as the Finance Act 1981.

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

• (3) Part IV of this Act, so far as it relates to income tax, shall be construed as one with the Income Tax Acts, so far as it relates to corporation tax, shall be construed as one with the Corporation Tax Acts and, so far as it relates to capital gains tax, shall be construed as one with the Capital Gains Tax Act 1979.

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

• (5) In Parts VII and VIII of this Act “the principal Act” means the Oil Taxation Act 1975.

• (6) The enactments mentioned in Schedule 19 to this Act are hereby repealed to the extent specified in the third column of that Schedule, but subject to any provision at the end of any Part of that Schedule.

SCHEDULES 1, 2

SCHEDULES 3, 4

SCHEDULE 3

I — PROVISIONS SUBSTITUTED FOR PART II OF SCHEDULE 1

II — PROVISIONS SUBSTITUTED FOR PART II OF SCHEDULE 2

III — PROVISIONS SUBSTITUTED FOR PART II OF SCHEDULE 3

IV — PROVISIONS SUBSTITUTED FOR PART II OF SCHEDULE 4

TABLES SHOWING ANNUAL RATES OF DUTY ON GOODS VEHICLES

V — PROVISIONS SUBSTITUTED FOR PART II OF SCHEDULE 5

SCHEDULE 4

I — PROVISIONS SUBSTITUTED FOR PART II OF SCHEDULE 1

II — PROVISIONS SUBSTITUTED FOR PART II OF SCHEDULE 2

III — PROVISIONS SUBSTITUTED FOR PART II OF SCHEDULE 3

IV — PROVISIONS SUBSTITUTED FOR PART II OF SCHEDULE 4

TABLES SHOWING ANNUAL RATES OF DUTY ON GOODS VEHICLES

V — PROVISIONS SUBSTITUTED FOR PART II OF SCHEDULE 5

SCHEDULE 5

1

• (1) At the beginning of sub-paragraph (1) of paragraph 3 of Schedule 2 to the Betting and Gaming Duties Act 1972 there shall be inserted the words " Subject to sub-paragraph (2A) below ".

• (2) For sub-paragraph (2) of that paragraph there shall be substituted—

(2) Subject to sub-paragraph (2A) below, a gaming licence shall be expressed to take effect— (a) on the first day of the period for which it is granted, or (b) on the fourteenth day after the date of the application, whichever is the later. (2A) Where a gaming licence would otherwise, by virtue of sub-paragraph (2\b) above, be expressed to take effect on the fourteenth day after the date of the application, it may, if the Commissioners think fit, be expressed to take effect earlier than that day, but in no case earlier than the day following that date.

2

In paragraph 14 of Schedule 2 and in paragraph 17 of Schedule 4 to that Act for the words from " proves " to " that the offence " there shall be substituted the words " proves that the offence " and the words "the contravention, or as the case may be" shall be omitted.

3

In paragraph 21 of Schedule 3 to that Act for the word " gaming " there shall be substituted the words " betting or gaming ".

4

• (1) In paragraph 4(1) of Schedule 4 to that Act for the words " shall, in the case of a new licence," there shall be substituted the words " shall, subject to paragraph 5(1A) below, " and the words following the word " force " shall cease to have effect.

• (2) For sub-paragraph (1) of paragraph 5 of that Schedule there shall be substituted—

(1) Subject to sub-paragraph (1A) below, a licence shall be expressed to take effect— (a) on the first day of the period for which it is granted, or (b) on the fourteenth day after the date of the application, whichever is the later. (1A) Where a licence would otherwise, by virtue of sub-paragraph (1)(b) above, be expressed to take effect on the fourteenth day after the date of the application it may, if the Commissioners think fit, be expressed to take effect earlier than that day, but in no case earlier than the day following that date.

5

The maximum penalty which may be imposed on summary conviction in Scotland for an offence under paragraph 15(1)(d) or (c) or 16(1) of Schedule l, paragraph 13(1)(c) or (d) of Schedule 2 or paragraph 17(1) or (2) of Schedule 3 to that Act shall be the same as the maximum penalty which may be imposed on summary conviction in England or Wales for such an offence.

6

Sections 6 and 7(1) of and Schedule 5 and Part I of Schedule 6 to the Finance Act 1980 shall be construed as one with the Customs and Excise Management Act 1979.

SCHEDULE 6

Entry of goods on importation

1

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

Acceptance of incomplete entry

2

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

Examination of goods for purpose of making entry

3

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

Correction and cancellation of entry

4

After the section inserted by paragraph 3 above there shall be inserted—

(38B) (1) Where goods have been entered for home use or for free circulation the importer may correct any of the particulars contained in an entry of the goods after it has been accepted if— (a) the goods have not been cleared from customs and excise charge; (b) he has not been notified by an officer that the goods are to be examined; and (c) the entry has not been found by an officer to be incorrect. (2) The proper officer may permit or require any correction allowed by subsection (1) above to be made by the delivery of a substituted entry. (3) An entry of goods may at the request of the importer be cancelled at any time before the goods are cleared from customs and excise charge if the importer proves to the satisfaction of the Commissioners that the entry was delivered by mistake or that the goods cannot be cleared for free circulation.

Removal of uncleared goods

5

In section 40(1) for paragraph (b) there shall be substituted—

(b) at the expiration of 21 clear days from the date when they were presented at the proper office of customs and excise they have not been produced for examination and clearance and the failure to produce them is attributable to an act or omission for which the importer is responsible; or

.

Failure to comply with provisions as to entry

6

At the end of section 41 there shall be inserted the words

but this section shall not apply to— (a) any failure which has been or may be remedied by virtue of section 38B(1); or (b) any failure in respect of an entry which by virtue of section 38(B)(3) has been or may be cancelled at his request.

Duties on imported goods

7

• (1) Section 43 shall be amended as follows.

• (2) For subsection (2)(a) (time for determining duty where entry is made) there shall be substituted—

(a) if entry is made thereof, except where the entry is for warehousing, or if they are declared under section 78 below, shall be those in force with respect to such goods at the time when the entry is accepted or the declaration is made;

.

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

• (4) After subsection (5) there shall be inserted—

(6) Where entry of goods is made otherwise than for warehousing and there is a reduction in the rate of duty of customs or excise chargeable on the goods between— (a) the time mentioned in subsection (2)(a) above; and (b) the time when the goods are cleared from customs and excise charge, the rate of the duty chargeable on the goods shall if the importer so requests, be that in force at the time mentioned in paragraph (b) above unless clearance of the goods has been delayed by reason of any act or omission for which the importer is responsible. (7) Notwithstanding section 6(5) of the European Communities Act 1972 “duty of customs” in subsection (6) above does not include any agricultural levy. (8) Where samples are taken of goods under section 38A above and the quantity of the goods covered by the entry which is subsequently delivered does not include the samples the duties of customs and the rates of those duties chargeable on the samples shall be those in force at the time when the application under subsection (1) of that section was made and shall be determined by reference to the particulars contained in the application. (9) Where a substituted entry is delivered under section 38(2) or 38B(2) above the entry referred to in subsection (2)(a) above is the original entry.

Delivery of imported goods on giving security for duty

8

In section 119(1) after the words “for home use” there shall be inserted the words “ or for free circulation ”.

Restriction on delivery of goods

9

In section 128(1) and (2) (power to restrict delivery of goods chargeable with duty of customs or excise) the words “customs or” shall be, omitted.

SCHEDULE 7

Part I — Sections Substituted in Customs and Excise Management Act 1979

Part II — Amendments of Customs and Excise Management Act 1979

Control of movement of goods

1

• (1) Section 31 shall be amended as follows.

• (2) In subsection (1)—

• (a) in paragraph (a) after the words “such goods” there shall be inserted the words “ or the place of exportation of such goods ” ; and

• (b) in paragraph (b) after the words “such goods” there shall be inserted the words “ , or a place designated by the proper officer under section 53(4) or 58(3) below, ”.

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

(2A) Any documents required to be made or produced as a result of regulations made under subsection (1) above shall be made or produced in such form and manner and contain such particulars as the Commissioners may direct; but the Commissioners may relax any requirement imposed under the regulations that any specific document be made or produced and if they do so may impose substituted requirements.

• (4) In subsection (3) after the words “such regulation” there shall be inserted the words “ or a direction made under subsection (2A) above or any requirement imposed under that subsection ”.

Dutiable or restricted goods

2

• (1) Section 52 shall be amended as follows.

• (2) After paragraph (l) there shall be inserted—

(g) goods incorporating or resulting from the use of inward processing goods or any goods which, following a determination by the Commissioners, are to be treated for customs purposes as inward processing goods in substitution for such goods.

.

• (3) The provisions of that section as amended by sub-paragraph (2) above shall become subsection (1) and after that subsection there shall be inserted—

(2) In this section “inward processing goods” means goods imported for the purpose of being worked on, processed or used in any process or repaired and on the importation of which relief from import duty or agricultural levy was given on condition that goods incorporating or resulting from the use of them would be exported outside the European Union ; and in this subsection “agricultural levy” means any tax or charge, not being a customs duty, provided for under the common agricultural policy or under any special arrangements which, pursuant to Article 235 of the E.E.C. Treaty are applicable to goods resulting from the processing of agricultural products.

Restrictions on putting export goods alongside for loading

3

In section 59(1) for the words “whether under section 53 or section 54 above” there shall be substituted the words “ under section 53 above ”.

Provisions as to stores

4

• (1) Section 61 shall be amended as follows.

• (2) In subsection (2) (right to ship stores in ship of not less than 40 tons register or aircraft departing for a voyage or flight to some place outside the United Kingdom) for the words “to some place outside the United Kingdom” there shall be substituted the words “ to a country outside the United Kingdom ”.

• (3) In subsection (3) (power of Commissioners to permit stores to be shipped in ship of less than 40 tons register which is departing for a place or area outside the United Kingdom) for the words from “any ship” onwards there shall be substituted the words—

(a) any ship departing from the United Kingdom, being either a ship of not less than 40 tons register departing for a voyage not falling within subsection (2) above or a ship of less than 40 tons register; or (b) any aircraft departing from the United Kingdom for a flight not falling within that subsection.

• (4) For subsection (9) there shall be substituted—

(9) References in this section to a country or destination outside the United Kingdom do not include references to, or to a destination in, the Isle of Man ; and subsection (5) above applies whether the goods were shipped in the United Kingdom or the Isle of Man.

Power to make regulations as to exportation, etc.

5

In section 66(2) for the words “a penalty of £100” there shall be substituted the words “ a penalty of £500, or in the case of a contravention of or a failure to comply with a regulation made under subsection (1)(b) above a penalty of £1,000, ”.

SCHEDULE 8

Part I — Amendments of Customs and Excise Management Act 1979

Definition of “revenue trader”

1

• (1) In the definition of “revenue trader” in subsection (1) of section 1—

• (a) after the word “means” there shall be inserted “ (a) ” ; and

• (b) for the words “and includes a registered club” there shall be substituted the words

; and (b) any person who is a wholesaler or an occupier of an excise warehouse (so far as not included in paragraph (a) above), and includes a registered club

.

• (2) In the Table in subsection (3) of that section the word “ “wholesaler” ” shall be inserted after the word “ “spirits””.

Warehousing regulations

2

In section 93—

• (a) in paragraph (a) of subsection (2) after the words “deposited in” there shall be inserted the words “ secured in ” ;

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

• (c) after subsection (2) there shall be inserted—

(2A) Where any documents removed under the powers conferred by subsection (2)(g) above are lost or damaged the Commissioners shall be liable to compensate their owner for any expenses reasonably incurred by him in replacing or repairing the documents.

; and

• (d) in subsection (6)—

• (i) for the words “or restriction” there shall be substituted the words “ restriction or requirement ” ; . . .

• (ii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Deficiency in warehoused goods

3

Section 94(2) shall cease to have effect.

Procedure on warehouse ceasing to be approved

4

In section 98—

• (a) at the end of subsection (1) there shall be inserted the words “ and, unless the notice has been withdrawn or extended, the warehouse shall cease to be approved on that date ” ; and

• (b) for subsection (3) there shall be substituted—

(3) If after the date, on which the warehouse ceases to be approved any goods not duly cleared still remain in the former warehouse— (a) they may be taken by an officer to a Queen’s warehouse and, without Prejudice to section 99(3) below, if they are not cleared from it within one month may be sold ; or (b) if the Commissioners so allow, they may re in the former warehouse and if they are not cleared from it within one month may be sold. (3A) Where in accordance with paragraph (b) above goods remain in the warehouse after the revocation or expiry of the Commissioners’ approval— (a) subsections (6) and (7) of section 99 below shall apply to them as if they were deposited in a Queen’s warehouse under the Customs and Excise Acts 1979; and (b) sections 93, 94, 95 and 97 above and section 100 below shall apply and any security given by bond or otherwise and any condition imposed by or under the customs and excise Acts shall continue to have effect, as if the former warehouse were still a warehouse.

Excise licences

5

Sections 105 and 106 shall cease to have effect.

Powers of entry on premises of revenue traders

6

In section 112—

• (a) in subsection (1) after the word “machinery” there shall be inserted the word “ vehicles ” ; and

• (b) in subsection (3) for the words “or maker of cider” there shall be substituted the words “ , maker of cider or occupier of an excise warehouse ”.

Power to estimate excise duties

7

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

Execution and distress

8

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

Proof of documents

9

In section 153 after subsection (3) there shall be inserted—

(4) A photograph of any document delivered to the Commissioners for any customs or excise purpose and certified by them to be such a photograph shall be admissible in any proceedings, whether civil or criminal, to the same extent as the document itself.

Part II — Amendments of Alcoholic Liquor Duties Act 1979

Ascertainment of volume etc. of alcoholic liquors from labels etc.

10

After subsection (3) of section 2 there shall be inserted—

(3A) Without prejudice to the generality of subsection (3) above, regulations under that subsection may provide that for the purpose of charging duty on any spirits, wine or made-wine contained in any bottle or other container, the strength, weight or volume of the spirits, wine or made-wine may be ascertained by reference to any information given on the bottle or other container by means of a label or otherwise or to any documents relating to the bottle or other container.

.

Definitions of “wholesale” and “wholesaler”

11

For the definitions of “wholesale” and “wholesaler” in section 4(1) there shall be substituted—

“wholesale”, in relation to dealing in dutiable alcoholic liquor, means the sale at any one time to any one person of quantities not less than the following, namely— (a) in the case of spirits, wine or made-wine, 9 litres or 1 case; or (b) in the case of beer or cider, 20 litres or 2 cases; “wholesaler” means a person who deals wholesale in dutiable alcoholic liquor;

.

Regulations about manufacture of spirits

12

In section 13—

• (a) after subsection (1) there shall be inserted—

(1A) Without prejudice to the generality of subsection (1) above, regulations under that subsection may— (a) provide for the imposition under the regulations of conditions and restrictions relating to the matters mentioned in that subsection; and (b) impose or provide for the imposition of requirements on a manufacturer of spirits to keep and preserve records relating to his business as such a manufacturer and to produce them to an officer when required to do so for the purpose of allowing him to inspect them, to copy or take extracts from them or to remove them at a reasonable time and for a reasonable period. (1B) Where any documents removed under the powers conferred by subsection (1A)(b) above are lost or damaged the Commissioners shall be liable to compensate their owner for any expenses reasonably incurred by him in replacing or repairing the documents.

;

• (b) in subsection (3) after the words “subsection (1) above” there shall be inserted the words “ or with any condition, restriction or requirement imposed under such a regulation ”. . .;

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

Attenuation charge for distilled spirits

13

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

Distillers’ warehouses

14

In section 15—

• (a) for subsection (2) there shall be substituted—

(2) The Commissioners may approve such a place of security for such periods and subject to such conditions as they think fit.

;

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

• (c) in subsection (7) after the words “subsection (6) above” there shall be inserted the words “ or with any condition, restriction or requirement imposed under such a regulation ”. . .

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

Rectifying and compounding of spirits

15

In section 19—

• (a) after subsection (1) there shall be inserted—

(1A) Without prejudice to the generality of subsection (1) above, regulations under that subsection may— (a) provide for the imposition under the regulations of conditions and restrictions relating to the matters mentioned in that subsection; and (b) impose or provide for the imposition under the regulations of requirements on rectifiers and compounders of spirits to keep and preserve records relating to their business as such and to produce them to an officer when required to do so for the purpose of allowing him to inspect them, to copy or take extracts from them or to remove them at a reasonable time and for a reasonable period. (1B) Where any documents removed under the powers conferred by subsection (1A)(b) above are lost or damaged the Commissioners shall be liable to compensate their owner for any expenses reasonably incurred by him in replacing or repairing the documents.

;

• (b) in subsection (2) after the word “section” there shall be inserted the words “ or with any condition, restriction or requirement imposed under any such regulation ”. . .

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

Drawback on British compounds and spirits of wine

16

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

Restrictions on distillers and rectifiers

17

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

Spirits consignment and advice notes

18

Sections 27 to 30 shall cease to have effect.

Transfer of spirit from distillers’ warehouses

19

In section 32(1) the words from “and” onwards shall cease to have effect.

Abolition of wholesalers’ licences etc.

20

Sections 65, 68, 70 and 85 to 89 shall cease to have effect.

Restrictions on wholesalers of spirits

21

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

Methylated spirits

22

Section 76 shall cease to have effect.

23

In section 77—

• (a) in subsection (1) in paragraph (d) for the words “the sale without a licence of” there shall be substituted the words “ dealing wholesale (within the meaning of section 75 above) without a licence in ” ;

• (b) at the end of subsection (2) there shall be inserted the words

and, without prejudice to the generality of subsection (1) above, regulations under this section may— (a) provide for the imposition under the regulations of conditions and restrictions relating to the matters mentioned in that subsection ; and (b) impose or provide for the imposition by regulations of requirements on authorised or licensed methylators and on retailers of methylated spirits to keep and preserve records relating to their businesses as such and to produce, them to an officer when required to do so for the purpose of allowing him to inspect them, to copy or take extracts from them or to remove them at a reasonable time and for a reasonable period.

;

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

(2A) Where any documents removed under the powers conferred by subsection (2)(b) above are lost or damaged the Commissioners shall be liable to compensate their owner for any expences reasonably incurred by him in replacing or repairing the documents.

;

• (d) in subsection (3) for the words “he shall be liable” onwards there shall be substituted the words “ or with any condition, restriction or requirement imposed under such a regulation, he shall be liable on summary conviction to a penalty of £500 together in the case of such a failure with a penalty of £20 for each day on which the failure continues ” ; and

• (e) in subsection (4) for the word “sells” there shall be substituted the words “ deals wholesale (within the meaning of section 75 above) in ” and the words “or 76” shall cease to have effect.

Part III — Amendments of Licensing Acts

The Licensing Act 1964

24

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

25

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

The Licensing Act (Northern Ireland) 1971

26

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

27

In the definition of "intoxicating liquor" in section 84(1) of that Act for paragraph (b) there shall be substituted—

1. perfumes;
2. flavouring essences recognised by the Commissioners as not being intended for consumption as or with dutiable alcoholic liquor;
3. spirits, wine or made-wine so medicated as to be, in the opinion of the Commissioners, intended for use as a medicine and not as a beverage ; and expressions used in paragraphs (a) and (d) above shall have the same meaning as in the Alcoholic Liquor Duties Act 1979.

.

28

In section 85 of that Act for paragraph (c) there shall be substituted—

(c) prejudice or affect the sale by any manufacturing or wholesale chemist and druggist of spirits of wine wholesale for medicinal purposes to registered medical practitioners, duly registered pharmaceutical chemists, chemists and druggists or persons requiring the spirits for use for scientific purposes in any laboratory ;

.

SCHEDULE 9

PART I — The All Stocks Index

1

The Department of Industry shall for the purposes of this Schedule prepare and publish a monthly index (to be known as " the all stocks index ") reflecting movements in the average price level of stocks held by corporate and unincorporated businesses in the United Kingdom.

2

In determining under this Schedule whether there has been an increase in the all stocks index over a period and, if so, the amount of the increase there shall be compared the figure given by the index for the month containing the last day of the period and the figure given by the index for the month containing the last day before the beginning of that period.

PART II — Income Tax

Entitlement to relief

3

• (1) Where a person carries on a trade in respect of which he is within the charge to income tax under Case I of Schedule D he shall, subject to the provisions of this Schedule, be entitled to relief under this paragraph in respect of a period of account if—

• (a) there is an increase in the all stocks index over that period ; and

• (b) the value of his trading stock at the end of the preceding period of account exceeded £2,000.

• (2) The relief shall be calculated by reference to the amount by which the value of the trading stock referred to in sub-paragraph (1)(b) above exceeded £2,000 and, subject to sub-paragraph (4) below, shall be equal to such percentage of that amount at corresponds to the percentage increase in the all stocks index over the period referred to in sub-paragraph (1)(a) above.

• (3) A person shall not be entitled to relief under this paragraph in respect of any period of account unless a claim for the relief is made within two years after the end of the year of assessment in which that period of account ends.

• (4) A person may, in making a claim for relief under this paragraph in respect of any period of account, specify an amount of relief less than that available under sub-paragraph (2) above and, if he does so, the relief to which he is entitled under this paragraph in respect of that period shall be the amount specified in the claim.

Recovery of relief on cessation of trade etc.

4

• (1) Where during or at the end of a period of account a person carrying on a trade ceases to do so, or ceases to be within the charge to income tax under Case I of Schedule D in respect of the trade, then, subject to paragraph 20 below—

• (a) he shall not be entitled to relief in respect of that period; and

• (b) a charge by way of recovery of relief shall be made on him on an amount equal to the unrecovered past relief allowed to him for that trade.

• (2) Sub-paragraph (1) above shall apply also where the scale of the activities of the trade for any period of account is negligible in comparison with their scale for any previous period of account beginning not more than six years before the first-mentioned period.

• (3) Where a charge for a period of account falls to be made under sub-paragraph (1)(b) above in consequence of a person ceasing to be within the charge to income tax in respect of a trade, or would fall to be so made apart from this sub-paragraph—

• (a) the unrecovered past relief allowed to him for that trade shall be treated as reduced by any relief to which he was entitled for that trade in respect of a previous period of account but to which effect cannot be given because of his ceasing to be within the charge to income tax in respect of the trade; and

• (b) the charge shall be reduced accordingly or, if the amount of the relief is equal to or exceeds the unrecovered past relief, shall not be made.

• (4) Where during or at the end of a period of account a person carrying on a trade ceases (by virtue of ceasing to be resident in the United Kingdom) to be within the charge to income tax under Case I of Schedule D in respect of a part of the trade, he shall be treated for the purposes of this Schedule as if that part were a separate trade carried on by him in that period; and all necessary apportionments between the two parts of the trade (including the apportionment of unrecovered past relief allowed for that trade) shall be made by reference to the respective values of the trading stock of each part immediately after that event.

Method of giving effect to relief or charge

5

• (1) Relief under paragraph 3 above in respect of any period of account shall be given as a deduction in charging the profits or gains of the trade to income tax for the relevant year of assessment.

• (2) Subject to sub-paragraph (3) below, any deduction for capital allowances shall be made before the deduction of the relief.

• (3) Where the deductions for the relevant year of assessment include deductions for relief, capital allowances or losses carried forward from an earlier year under paragraph 9 below, section 70(4) of the Capital Allowances Act 1968 or section 171 of the Taxes Act, the deductions shall be made in the following order—

• (a) capital allowances other than those carried forward under the said section 70(4) from an earlier year ;

• (b) relief under paragraph 3 above in respect of the period of account in relation to which the year is the relevant year of assessment;

• (c) capital allowances carried forward as aforesaid from years of assessment not earlier than the year for which the basis period ended on or included 14th November 1980 ;

• (d) relief under paragraph 3 above carried forward under paragraph 9 below, taking relief in respect of a later period of account before relief in respect of an earlier one ;

• (e) capital allowances carried forward as aforesaid from years of assessment earlier than those referred to in paragraph (c) above;

• (f) relief under Schedule 5 to the Finance Act 1976 ;

• (g) losses carried forward to the year under the said section 171.

• (4) Where the same year is the relevant year of assessment in relation both to—

• (a) a period of account in respect of which relief falls to be allowed under this Part of this Schedule ; and

• (b) a period of account in respect of which relief fell to be allowed under Schedule 5 to the Finance Act 1976,

the relief given effect in that year shall be attributed to the latter before the former.

• (5) A charge under paragraph 4 above in respect of any period of account shall be made by means of an assessment to income tax on the profits or gains of the trade—

• (a) in the case of a charge by reason of a person ceasing to carry on the trade or ceasing to be within the charge to income tax in respect of the trade, for the year of assessment in which the cessation occurs; and

• (b) in the case of a charge in the circumstances mentioned in sub-paragraph (2) of that paragraph, for the relevant year of assessment.

Any such assessment shall be in addition to any other assessment falling to be made on the profits or gains of the trade for the year of assessment in question.

Top-slicing

6

• (1) Where a trade has been carried on by a person for more than one year before the discontinuance or other event on which a charge under paragraph 4 above falls to be made on him, then his liability to tax for the year of assessment for which the charge is made shall, on a claim made by him within two years after the end of that year of assessment, be reduced in accordance with the following provisions of this paragraph.

• (2) The reduction is the amount of the difference between—

• (a) the tax on the whole amount on which the charge is made (the "chargeable amount"), calculated on the basis set out in sub-paragraph (4) below ; and

• (b) the tax (if any) on the appropriate fraction of the chargeable amount, calculated on the same basis, and multiplied by the reciprocal of the appropriate fraction.

• (3) The " appropriate fraction " depends on the period for which the trade has been carried on before the discontinuance or other event and is—

• (a) one-half if the trade has been so carried on for more than one but less than two years ;

• (b) one-third if it has been so carried on for two years or more.

• (4) The amounts of tax referred to in sub-paragraph (2) above are to be calculated on the following assumptions—

• (a) that the person's total income does not include any amount in respect of which he is chargeable to tax under section 80, 81 or 82 of the Taxes Act (premiums, etc. treated as rent), section 187 of that Act (payments on retirement or removal from office) or section 399(1 )(a) of that Act (gains from life policies etc.);

• (b) that deductions to be made in computing the tax are so far as possible set against sums other than the chargeable amount (or the fraction of it);

• (c) that the chargeable amount (or fraction), after any deductions remaining to be made after applying paragraph (b) above, is the highest part of the person's total income (notwithstanding any other provisions of the Income Tax Acts directing any other income to be so treated).

• (5) Where a claim under this paragraph for any year of assessment is made in respect of more than one trade, this paragraph applies to each chargeable amount individually as if there were only one charge in that year.

• (6) For the purposes of section 400 of, and paragraphs 3 and 4 of Schedule 3 to, the Taxes Act (other top-slicing provisions) a person's total income shall not be treated as including any amount as a result of a charge under paragraph 4.

Meaning of " relevant year of assessment" and " basis period "

7

• (1) This paragraph provides for ascertaining the relevant year of assessment in relation to a period of account for the purposes of this Part of this Schedule.

• (2) In this Part of this Schedule—

• (a) the " basis period " for any year of assessment means the the period on the profits or gains of which income tax for that year falls to be finally computed under Case I of Schedule D in respect of the trade in question, or, where, by virtue of any provision of section 115 of the Taxes Act, the profits or gains of any other period are to be taken as the profits or gains of the said period, that other period; and

• (b) references to a period of account entering into a basis period are to the period of account, or any part of it, falling within or coinciding with that basis period.

• (3) Where a period of account enters into the basis period for only one year of assessment, that year is the relevant year of assessment in relation to that period of account.

• (4) Where a period of account enters into the basis period for more than one year of assessment, then—

• (a) if it does so by virtue of section 116 or 117 of the Taxes Act (commencement of trade), the relevant year of assessment in relation to that period of account is the first year of assessment into whose basis period the period of account enters; and

• (b) in any other case, the relevant year of assessment is the last such year of assessment.

• (5) Where a period of account does not enter into the basis period for any year of assessment, the relevant year of assessment in relation to that period of account is that following the year of assessment in which the period of account ends.

Right to set unused relief against general income

8

• (1) Subject to the provisions of this paragraph, a claim made under section 168 of the Taxes Act (set-off of losses against general income) for relief in respect of a loss sustained by the claimant in a trade in any year of assessment (the " year of loss ") may require the amount of that loss to be determined as if an amount equal to the relief to which he is entitled under this Part of this Schedule for the year of assessment for which the year of loss is the basis year were to be deducted in computing the profits or gains or losses of the trade in the year of loss.

• (2) Where there are capital allowances that can be the subject of a claim under the said section 168 by virtue of section 169 of the Taxes Act, no claim shall be made under section 168 by reference to relief under this Part of this Schedule unless a claim is also made by reference to those capital allowances; but a claim may be made under section 168 for relief in respect of a loss sustained by the claimant in any trade in any year of assessment notwithstanding that the claimant would not have sustained a loss in that year unless relief under this Part of this Schedule is brought into account.

• (3) Relief for any year of assessment shall be taken into account by virtue of this paragraph only if and so far as it is not required to offset any charge for that year under paragraph 4 above; and for the purposes of this sub-paragraph the relief for a year of assessment shall be treated as required to offset the charge for a year up to the amount on which the charge falls to be made after deducting from it the amount (if any) of relief for earlier years which is carried forward to that year and would, if not set against the charge, be unused in that year.

• (4) Where the relief taken into account by virtue of this paragraph is that for the year of assessment for which the claim is made or for the preceding year (the year of loss being the basis year for that year itself, or the claim being made by way of carry forward of the loss by virtue of section 168(2) of the Taxes Act), effect shall not be given to that relief in respect of an amount greater than the amount unused in the year for which the claim is made, or, in the case of relief for the preceding year, the amount unused in both years.

• (5) For the purposes of this paragraph—

• (a) where the end of the basis period for a year of assessment falls in, or coincides with the end of, any year of assessment, that year is the basis year for the first-mentioned year of assessment, but so that, if a year of assessment would under the foregoing provision be the basis year both for that year itself and for another year of assessment, it shall be the basis year for the year itself and not for the other year;

• (b) any reference to the relief or charge for a year of assessment shall be construed as a reference to the relief or charge falling to be given effect in that year (excluding, in the case of relief, any part of the relief for an earlier year carried forward under paragraph 9 below);

• (c) any reference to an amount of relief unused in a year shall be construed as referring to the amount by which, by reason of an insufficiency of profits or gains, effect cannot be given to the relief in that year.

• (6) Where, on a claim made by virtue of this paragraph, relief is not given under section 168 of the Taxes Act for the full amount of the loss determined as mentioned in sub-paragraph (1) above, the relief under that section shall be attributed—

• (a) to the loss sustained by the claimant in the trade rather than to the capital allowances in respect of the trade brought into account by virtue of section 169 of the Taxes Act; and

• (b) to those capital allowances rather than to relief under this Part of this Schedule.

• (7) Where a claim is made under the said section 168 by a person who, since the end of the year for which the claim is made, has carried on the trade in question in partnership, then effect shall be given to this paragraph in relation to that claim only with the consent in writing of every other person engaged in carrying on the trade between the end of that year and the making of the claim, except that where the claim is for a loss sustained before an event treated as the permanent discontinuance of the trade, the consent is not required of a person so engaged only since the discontinuance.

• (8) If a person whose consent is required under sub-paragraph (7) has died, the consent in writing of his personal representatives is required instead.

Carry forward of unused relief

9

• (1) Where, in any year of assessment, full effect cannot be given to any relief falling to be allowed under this Part of this Schedule owing to there being no profits or gains of the trade chargeable for that year, or owing to the profits or gains chargeable being less than the amount of the relief, the relief or part of the relief to which effect has not been given, as the case may be, shall be carried forward and given effect in accordance with paragraph 5 above in the following year and, subject to paragraph 10 below, so on for succeeding years.

• (2) There may be carried forward under this paragraph to a year of assessment any relief under Schedule 5 to the Finance Act 1976 to the extent to which effect has not been given to it in a previous year.

• (3) This paragraph has effect subject to paragraph 8 above.

Restriction on carry forward of unused relief

10

Relief falling to be allowed under this Part of this Schedule in respect of a period of account shall not by virtue of paragraph 9 above be carried forward to a year of assessment if that period ended six years or more before the beginning of the period of account in relation to which that year is the relevant year of assessment.

Social security contributions

11

In computing for the purposes of Schedule 2 to the Social Security Act 1975 the amount of the profits or gains of a trade in respect of which Class 4 contributions are payable—

• (a) deductions or additions shall be made under paragraph 2 of that Schedule for any relief or charge under this Part of this Schedule which falls to be made in charging profits or gains to income tax under Case I of Schedule D ; and

• (b) paragraphs 8 and 9 above shall be included among the relief provisions to which paragraph 3(1) of that Schedule applies.

PART III — Corporation Tax

Entitlement to relief

12

• (1) Where a company carries on a trade in respect of which it is within the charge to corporation tax under Case I of Schedule D it shall, subject to the provisions of this Schedule, be entitled to relief under this paragraph in respect of a period of account if—

• (a) there is an increase in the all stocks index over that period; and

• (b) the value of its trading stock at the end of the preceding period of account exceeded £2,000.

• (2) The relief shall be calculated by reference to the amount by which the value of the trading stock referred to in sub-paragraph (1)(b) above exceeded £2,000 and, subject to sub-paragraph (4) below, shall be equal to such percentage of that amount as corresponds to the percentage increase in the all stocks index over the period referred to in sub-paragraph (1)(a) above.