Finance Act 1981

• (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.

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

• (4) A company 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 it does so, the relief to which it 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.

13

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

• (a) it 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 the company on an amount equal to the unrecovered past relief allowed to it 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 during or at the end of a period of account a company carrying on a trade ceases (by virtue of ceasing to be resident in the United Kingdom) to be within the charge to corporation tax under Case I of Schedule D in respect of a part of the trade, it shall be treated for the purposes of this Schedule as if that part were a separate trade carried on by it 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

14

• (1) Where there is a change of ownership of a company and section 483 of the Taxes Act applies so as to restrict the carrying forward of losses incurred before the change, then relief to which those disallowed losses are attributable shall, although unrecovered in periods of account ending before the change of ownership, nevertheless be disregarded in ascertaining the amount of unrecovered past relief in later periods of account.

• (2) Relief to which disallowed losses are attributable is that which was not given effect in the period of account or base period for which it was allowed or in a subsequent period of account.

• (3) For the purposes of sub-paragraph (2) above—

• (a) relief under Part II of Schedule 5 to the Finance Act 1976 ; and

• (b) Schedule 10 relief as defined in paragraph 18 of that Schedule,

is assumed to be given effect before capital allowances and profits or gains are assumed to be set against losses attributable to that relief before other losses; and any question whether effect has been given to relief under this Part of this Schedule shall be determined as for the purposes of paragraph 17(1) below. Section 483(5) of the Taxes Act has effect subject to this sub-paragraph.

• (4) For the purpose of ascertaining the extent to which relief to which disallowed losses are attributable has been recovered in periods of account ending before the change of ownership, it shall be assumed—

• (a) that relief within sub-paragraph (3)(a) or (b) above is re covered from earlier periods before later periods and that effect is given to that relief from earlier periods before later periods;

• (b) that relief under this Part of this Schedule is recovered from later periods before earlier periods and that effect is given to that relief from later periods before earlier periods.

15

• (1) Where an amount of government investment in a body corporate is set off under section 48 of this Act against that body's losses as at the end of an accounting period, being losses within subsection (3)(a) of that section, then—

• (a) if the whole amount of those losses is extinguished by the set off sub-paragraph (2) below shall have effect in relation to the relief to which that amount is attributable; and

• (b) if a lesser amount of those losses is so extinguished, that sub-paragraph shall have effect in relation to the relief to which that lesser amount is attributable.

• (2) The relief referred to in sub-paragraph (1) above shall, although unrecovered in periods of account ending in or before the accounting period there mentioned, nevertheless be disregarded in ascertaining the amount of unrecovered past relief in later periods of account.

• (3) Subject to sub-paragraph (4) below, relief to which any amount of extinguished losses is attributable shall be identified in accordance with paragraph 14(2) to (4) above as in the case of relief to which disallowed losses are attributable.

• (4) For the purposes of sub-paragraph (1)(b) above

• (a) the set off shall be treated as extinguishing the loss of an earlier accounting period before that of a later accounting period; and

• (b) if the set off extinguishes only part of the loss of an accounting period, the components of that part shall be identified in accordance with paragraph 14(3) above as if that part were profits against which effect could be given to the relief.

Method of giving effect to relief or charge

16

• (1) Relief under paragraph 12 above in respect of any period of account shall, subject to the provisions of this paragraph, be given effect by treating the amount of the relief as a trading expense of the trade in that period.

• (2) A charge under paragraph 13 above in respect of any period of account shall, subject to the provisions of this paragraph, be given effect by treating the amount on which the charge is to be made as a trading receipt of the trade in that period.

• (3) Where a trade is set up and commenced by a company during a period of account, any amount which in accordance with this paragraph falls to be treated as an expense or receipt of the trade in that period, shall be brought into account only in respect of the accounting period, or periods, beginning with or after that commencement.

• (4) Where during a period of account a company carrying on a trade ceases to do so, or ceases in respect of it to be within the charge to corporation tax under Case I of Schedule D, any relief or charge which in accordance with this paragraph falls to be treated as an expense or receipt of the trade in that period, shall be brought into account only in respect of the accounting period, or periods, ending on or before that discontinuance or other event.

Restriction of carry forward of unused relief

17

• (1) Where a company incurs a loss in an accounting period there shall not be carried forward under section 177(1) of the Taxes Act to a subsequent accounting period so much of that loss as consists of relief under this Part of this Schedule for an accounting period which ended six years or more before the beginning of that subsequent accounting period.

• (2) For the purposes of this paragraph the loss incurred by a company in an accounting period shall be taken to consist of—

• (a) the loss, if any, incurred in the trade in that period (calculated without regard to capital allowances or relief under this Part of this Schedule);

• (b) the capital allowances for the accounting period less the amount of the profit, if any, that accrued from the trade in that period (calculated without regard to capital allowances or relief under this Part of this Schedule); and

• (c) the relief under this Part of this Schedule for the accounting period less so much of the profit referred to in paragraph (b) above as remains after deducting the capital allowances referred to in that paragraph.

• (3) Subject to sub-paragraph (4) below, where by virtue of section 177(2) of the Taxes Act (set off against profits), section 254 of that Act (set off against franked investment income) or section 258 of that Act (group relief) a loss falls to be set off against an amount of profits or franked investment income of an accounting period but the loss exceeds that amount, the part of the loss that is so set off shall for the purposes of tins paragraph be taken to consist—

• (a) first of the loss, if any, referred to in sub-paragraph (22a) above;

• (b) next of the capital allowances referred to in sub-paragraph (2)(b) above; and

• (c) lastly of the relief referred to in sub-paragraph (2)(c) above.

• (4) Where subsection (3A) of the said section 177 applies, the part of the loss referred to in sub-paragraph (3) above shall be attributed first to the additional amount allowed by virtue of that subsection under subsections (2) and (3) of that section and then as provided by sub-paragraph (3) above (excluding that amount from paragraph (b)).

• (5) Where by virtue of section 177(1) of the Taxes Act (carry forward of losses) any amount in respect of a loss or losses incurred by a company falls to be set off against the company's trading income in an accounting period but that amount exceeds that income, the part of the amount that is set off shall for the purposes of this paragraph be taken to consist—

• (a) first of capital allowances for previous accounting periods ending not earlier than 14th November 1980 ;

• (b) next of relief under this Part of this Schedule, taking relief in respect of a later period of account before relief in respect of an earlier one ;

• (c) next of losses incurred in the trade in previous accounting periods ending not earlier than 14th November 1980 (calculated without regard to capital allowances or rebel falling within paragraphs (a) and (b) above) and including any losses treated under section 254(5) of the Taxes Act as incurred in such accounting periods ; and

• (d) lastly of other losses, capital allowances and reliefs.

• (6) In this paragraph references to relief under this Part of this Schedule for an accounting period are to relief in respect of any period of account falling wholly within the accounting period and to a proportionate part of the relief in respect of any period of account falling partly within it.

PART IV — General Rules

Partnerships

18

• (1) Where a trade is carried on by persons in partnership, entitiement to relief or liability to charge under this Schedule is a joint entitlement or liability, and any claim for relief under this Schedule shall be a single claim made in the partnership name.

• (2) Where none of those persons is a company, entitlement to relief and liability to charge under this Schedule shall be ascertained and given effect as if the trade were carried on by an individual.

• (3) Where any of those persons is a company, entitlement to relief and liability to charge under this Schedule shall be ascertained as if the partnership were a company and shall be given effect in accordance with the following provisions of this paragraph.

• (4) A company's share in any such entitlement or liability in any accounting period of the partnership shall be determined according to the interests of the partners during that period, and shall be given effect as if the share derived from a trade carried on by the company alone in its corresponding accounting period or periods.

In this sub-paragraph " corresponding accounting period or periods " means the accounting period or periods of the company comprising or together comprising the accounting period of the partnership, and any necessary apportionment shall be made between corresponding accounting periods if more than one.

• (5) The share in any such entitlement or liability of the partner or partners other than companies shall be given as if that share derived from a trade carried on by him, or, as the case may be, by them in partnership, otherwise than in partnership with a company.

New businesses

19

• (1) A person's entitlement to relief under this Schedule for a trade in respect of a period of account shall be determined in accordance with this paragraph if the trade is set up and commenced at the beginning of that period or in the course of it

• (2) The relief to which the person is entitled for the trade in respect of the period of account shall be determined—

• (a) as if the value of his trading stock at the end of that period, as reduced in accordance with sub-paragraph (3) below, were the value of his trading stock at the end of the preceding period of account; and

• (b) if the period of account begins before the date on which the trade is set up and commenced, by reference to the increase, if any, in the all stocks index over the part of that period beginning with that date.

• (3) For the purposes of sub-paragraph (2)(a) above the value of the person's trading stock at the end of the period of account in respect of which the relief is given shall be reduced by multiplying it by the fraction of which—

• (a) the numerator is the figure given by the all stocks index for the month containing the last day before the beginning of that period; and

• (b) the denominator is the figure given by that index for the month containing the last day of that period.

• (4) If the period of account begins before the date on which the trade is set up and commenced the reference in sub-paragraph (3)(a) above to that period of account shall be construed as a reference to the part of it beginning with that date.

• (5) Sub-paragraph (2) has effect subject to paragraph 23 below.

Successions

20

• (1) The provisions of this paragraph apply—

• (a) where the whole or part of a trade carried on by one company (" the predecessor ") is transferred to another company (" the successor ") and section 252 of the Taxes Act (company reconstructions) has effect in relation to that event; or

• (b) where the whole of a trade carried on by an individual or by persons in partnership ("the predecessor") is transferred to a company resident in the United Kingdom ("the successor") and at the date of the transfer not less than three-quarters of the ordinary share capital of the company is held by that individual or those persons,

and, in either case, the trading stock is transferred at cost or at market value.

• (2) Where the whole of a trade is transferred and the predecessor and successor so elect—

• (a) paragraphs 4 and 13 above shall not apply to the predecessor's period of account which ends with or includes the date of transfer but, in ascertaining in the successor's period of account which begins with or includes that date and in any later period of account, the amount of unrecovered past relief allowed to a person in respect of the trade, the successor shall be treated as having carried on the trade since the predecessor began (or is himself treated, by virtue of this sub-paragraph or of any other provision of this Schedule or of Schedule 5 to the Finance Act 1976, as having begun) to do so ;

• (b) the relief to which the predecessor is entitled under this Schedule for that trade in respect of a period of account which begins before and ends after the date of transfer shall be determined by reference to the increase, if any, in the all stocks index over the part of the period before that date;

• (c) the relief to which the successor is entitled under this Schedule for that trade in respect of a period of account which begins with or includes the date of transfer shall be determined—

• (i) as if the value at which the trading stock was transferred were the value of his trading stock at the end of the preceding period of account; and