LegalizeReform history
Finance Act 1984
13 versions
· 1984-07-26
2024-02-22
Finance Act 1984
2016-10-01
Finance Act 1984
2013-01-31
Finance Act 1984
2011-04-22
Finance Act 1984
2010-09-01
Finance Act 1984
2010-04-01
Finance Act 1984
2009-04-01
Finance Act 1984
2008-07-21
Finance Act 1984
2007-11-08
Finance Act 1984
2005-12-05
Finance Act 1984
2004-07-22
Finance Act 1984
1994-09-01
Finance Act 1984
Changes on 1994-09-01
@@ -1,6 +1,6 @@
# Finance Act 1984
## PART I — Customs and Excise, Value Added Tax and Car Tax
## Part I — Customs and Excise, Value Added Tax and Car Tax
### CHAPTER I — Customs and Excise
@@ -8,118 +8,74 @@
##### 1
- (1) In section 5 of the Alcoholic Liquor Duties Act 1979 (excise duty on spirits) for "£15.19" there shall be substituted " £15.48 ".
- (2) In section 36 of that Act (excise duty on beer) for " £21.60 " and " £0.72 " there shall be substituted " £24.00 " and " £0.80 " respectively.
- (1) In section 5 of the Alcoholic Liquor Duties Act 1979 (excise duty on spirits) for “£15.19" there shall be substituted “ £ 15.48 ”.
- (2) In section 36 of that Act (excise duty on beer) for “£21.60" and “£0.72" there shall be substituted “ £24.00 ” and “ £0.80 ” respectively.
- (3) For the provisions of Schedule 1 to that Act (rates of excise duty on wine) there shall be substituted the provisions of Schedule 1 to this Act.
- (4) The rates of duty on made-wine shall be the same as those on wine and, accordingly, in section 55(1) of that Act for the words " Schedule 2" there shall be substituted the words " Schedule 1 ".
- (5) In section 62(1) of that Act (excise duty on cider) for " £9.69 " there shall be substituted " £14.28 " and in the definition of " cider " in section 1(6) of that Act for the words " less than 8.7 per cent." there shall be substituted the words " less than 8.5 per cent. ".
- (6) This section, and Schedule 1 to this Act, other than the paragraphs headed " Interpretation ", shall be deemed to have come into force on 14th March 1984.
- (4) The rates of duty on made-wine shall be the same as those on wine and, accordingly, in section 55(1) of that Act for the words “ Schedule 2" there shall be substituted the words “ Schedule 1 ”.
- (5) In section 62(1) of that Act (excise duty on cider) for “£9.69" there shall be substituted “ £14.28 ” and in the definition of “cider" in section 1(6) of that Act for the words “less than 8.7 per cent" there shall be substituted the words “ less than 8.5 per cent. ”.
- (6) This section, and Schedule 1 to this Act, other than the paragraphs headed “Interpretation", shall be deemed to have come into force on 14th March 1984.
#### Tobacco products
##### 2
- (1) For the Table in Schedule 1 to the Tobacco Products Duty Act 1979 there shall be substituted—
| 1. Cigarettes | An amount equal to 21 per cent, of the retail price plus £24.97 per thousand cigarettes. |
#### Hydrocarbon oil
##### 3
- (1) In section 6(1) of the Hydrocarbon Oil Duties Act 1979 (rates of duty on hydrocarbon oil) for “£0.1630" (light oil) and “£0.1382" (heavy oil) there shall be substituted “ £0.1716 ” and “ £0.1448 ” respectively.
- (2) In section 11(1)(a) of that Act (rebate on kerosene, other than aviation turbine fuel) for the words “of £0.0022 a litre less than" there shall be substituted the words “ equal to ”.
- (3) This section shall be deemed to have come into force at 6’oclock in the evening of 13th March 1984.
#### Vehicles excise duty
##### 4
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Vehicles excise duty: recipients of mobility supplement
##### 5
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Gaming licence duty
##### 6
- (1) In section 14 of the Betting and Gaming Duties Act 1981 (rate of gaming licence duty), for the Table set out in subsection (1) there shall be substituted the following Table—
| *Part of gross gaming yield* | *Rate* |
| --- | --- |
| 2. Cigars | £47.05 per kilogram. |
| 3. Hand-rolling tobacco | £40.60 per kilogram. |
| 4. Other smoking tobacco and chewing tobacco | £24.95 per kilogram. |
- (2) This section shall be deemed to have come into force on 16th March 1984.
#### Hydrocarbon oil
##### 3
- (1) In section 6(1) of the Hydrocarbon Oil Duties Act 1979 (rates of duty on hydrocarbon oil) for "£0.1630" (1ight oil) and "£0.1382 " (heavy oil) there shall be substituted " £0.1716 " and " £0.1448 " respectively.
- (2) In section 11(1)(a) of that Act (rebate on kerosene, other than aviation turbine fuel) for the words " of £0.0022 a litre less than " there shall be substituted the words " equal to ".
- (3) This section shall be deemed to have come into force at 6 o'clock in the evening of 13th March 1984.
#### Vehicles excise duty
##### 4
- (1) The Vehicles (Excise) Act 1971 and the Vehicles (Excise) Act (Northern Ireland) 1972 shall be amended as follows.
- (2) For the provisions of Part II of Schedules 1 to 5 to each of those Acts (annual rates of duty) there shall be substituted the provisions set out in Part I of Schedule 2 to this Act.
- (3) The provisions of Part I of Schedule 4 to each of those Acts (annual rates of duty on goods vehicles: general provisions) shall have effect subject to the amendments made by Part II of Schedule 2 to this Act.
- (4) In section 16 of the Act of 1971 (rates of duty for trade licences)—
- (a) in subsection (5), including that subsection as set out in paragraph 12 of Part I of Schedule 7 to that Act, for " £42 " and " £8.50 " there shall be substituted, respectively, " £44 " and " £9 " ; and
- (b) in subsection (8) the following definition shall be inserted at the appropriate place—
> - ' disabled vehicle ' includes a vehicle which has been abandoned or is scrap ;
.
- (5) In section 16 of the Act of 1972 (rates of duty for trade licences)—
- (a) in subsection (6), including that subsection as set out in paragraph 12 of Part I of Schedule 9 to that Act, for "£42" and "£8.50" there shall be substituted, respectively, " £44 " and " £9 " ; and
- (b) in subsection (10) the following definition shall be inserted at the appropriate place—
> - ' disabled vehicle ' includes a vehicle which has been abandoned or is scrap ;
.
- (6) The provisions of this section other than subsections (4)(b) and (5)(b) apply in relation to licences taken out after 13th March 1984.
#### Vehicles excise duty: recipients of mobility supplement
##### 5
- (1) Section 7 of the Vehicles (Excise) Act 1971 and section 7 of the Vehicles (Excise) Act (Northern Ireland) 1972 (exemption from vehicles excise duty) shall have effect with the following amendments.
- (2) In subsection (2) of that section of each Act (by virtue of which vehicles used by or for the purposes of persons in receipt of a mobility allowance are exempt from duty and vehicles are deemed to be registered in the names of such persons in certain circumstances)—
- (a) after the words " mobility allowance ", in both places, there shall be inserted the words " or a mobility supplement "; and
- (b) for the words from " a person appointed " to " powers " and the words " a person so appointed " there shall in each case be substituted the words " an appointee ".
- (3) After subsection (2) of section 7 of the 1971 Act there shall be inserted—
> (2A) In subsection (2) above—
> - ' mobility supplement ' means a mobility supplement under— a scheme made under the Personal Injuries (Emergency Provisions) Act 1939, or an Order in Council made under section 12 of the Social Security (Miscellaneous Provisions) Act 1977, or any payment appearing to the Secretary of State to be of a similar kind and specified by him by order made by statutory instrument; and
> - ' appointee ' means— a person appointed pursuant to regulations under the Social Security Act 1975 to exercise any of the rights or powers of a person in receipt of a mobility allowance, or a person to whom a mobility supplement is paid for application for the benefit of another person in receipt of the supplement.
> (2B) An order under subsection (2A) above may provide that it shall be deemed to have come into force on any date after 20th November 1983.
.
- (4) After subsection (2A) of section 7 of the 1972 Act there shall be inserted—
> (2AA) In subsection (2)—
> - ' mobility supplement' means a mobility supplement under— a scheme made under the Personal Injuries (Emergency Provisions) Act 1939, or an Order in Council made under section 12 of the Social Security (Miscellaneous Provisions) Act 1977, or any payment appearing to the Secretary of State to be of a similar kind and specified by him by order made by statutory instrument; and
> - ' appointee ' means— a person appointed pursuant to regulations under the Social Security (Northern Ireland) Act 1975 to exercise any of the rights or powers of a person in receipt of a mobility allowance, or a person to whom a mobility supplement is paid for application for the benefit of another person in receipt of the supplement.
> (2AB) An order under subsection (2AA) above may provide that it shall be deemed to have come into force on any date after 20th November 1983.
.
- (5) This section shall be deemed to have come into force on 21st November 1983.
#### Gaming licence duty
##### 6
- (1) In section 14 of the Betting and Gaming Duties Act 1981 (rate of gaming licence duty), for the Table set out in subsection (1) there shall be substituted the following Table—
| Part of gross gaming yield | Rate |
| --- | --- |
| The first £375,000 | 2 1/2 per cent. |
| The next £1,875,000 | 12 1/2 per cent. |
| The first £375,000 | 2½ per cent. |
| The next £1,875,000 | 12½ per cent. |
| The next £2,250,000 | 25 per cent. |
| The remainder | 33 1/3 per cent. |
| The remainder | 33⅓ per cent. |
- (2) This section shall have effect in relation to gaming licences for any period beginning after 31st March 1984.
@@ -135,7 +91,7 @@
##### 8
The provisions set out in Part I of Schedule 4 to this Act (which provide for special areas, to be known as free zones, to be designated for customs and excise purposes) shall be inserted in the Customs and Excise Management Act 1979 after Part VIII as a new Part VI11A, and that Act shall have effect with the amendments specified in Part II of that Schedule (which also relate to free zones).
The provisions set out in Part I of Schedule 4 to this Act (which provide for special areas, to be known as free zones, to be designated for customs and excise purposes) shall be inserted in the Customs and Excise Management Act 1979 after Part VIII as a new Part VIIIA, and that Act shall have effect with the amendments specified in Part II of that Schedule (which also relate to free zones).
#### Entry of goods on importation
@@ -151,47 +107,17 @@
##### 10
- (1) Schedule 5 to the Value Added Tax Act 1983 (zero-rating) shall have effect subject to the modifications in Schedule 6 to this Act.
- (2) In Schedule 6 to this Act—
- (a) Part I has effect with respect to supplies made on or after 1st May 1984 ; and
- (b) Parts II and III have effect with respect to supplies made on or after 1st June 1984.
#### Refund of tax to Government departments etc. in certain cases
##### 11
After subsection (2) of section 27 of the Value Added Tax Act 1983 (application of value added tax legislation to the Crown) there shall be inserted the following subsections—
> (2A) Where tax is chargeable on the supply of goods or services to, or on the importation of goods by, a Government department and the supply or importation is not for the purpose—
> (a) of any business carried on by the department, or
> (b) of a supply by the department which, by virtue of a direction under subsection (2) above, is treated as a supply in the course or furtherance of a business,
> then, if and to the extent that the Treasury so direct and subject to subsection (2B) below, the Commissioners shall, on a claim made by the department at such time and in such form and manner as the Commissioners may determine, refund to it the amount of the tax so chargeable.
> (2B) The Commissioners may make the refunding of any amount due under subsection (2A) above conditional upon compliance by the claimant with requirements with respect to the keeping, preservation and production of records relating to the supply or importation in question.
#### Conditions imposed on discretionary registration
##### 12
- (1) In paragraph 5 of Schedule 1 to the Value Added Tax Act 1983 (discretionary registration subject to conditions imposed by the Commissioners) after sub-paragraph (1) there shall be inserted the following sub-paragraph—
> (1A) Conditions under sub-paragraph (1) above—
> (a) may be imposed wholly or partly by reference to, or without reference to, any conditions prescribed for the purposes of this paragraph; and
> (b) may (whenever imposed) be subsequently varied by the Commissioners.
- (2) In paragraph 11 of Schedule 1 (discretionary registration subject to conditions imposed by the Commissioners) after sub-paragraph (2) there shall be inserted the following sub-paragraph—
> (2A) Conditions under sub-paragraph (1)(b) above—
> (a) may be imposed wholly or partly by reference to, or without reference to, any conditions prescribed for the purposes of this paragraph ; and
> (b) may (whenever imposed) be subsequently varied by the Commissioners.
#### Certain zero-rated supplies and transactions
##### 13
In section 16 of the Value Added Tax Act 1983 (zero-rating) in subsection (5) (certain supplies outside the United Kingdom and other transactions to be treated as supplies of goods or services in the United Kingdom) the words " of a supply of goods or services outside the United Kingdom or " and " supply or " shall be omitted.
### CHAPTER III — Miscellaneous
@@ -206,18 +132,16 @@
> (2) Any such relief may take the form either of an exemption from payment of duty and tax or of a provision whereby the sum payable by way of duty or tax is less than it would otherwise be.
> (3) The Commissioners may by order make provision supplementing any Community relief, in such manner as they think necessary or expedient.
> (4) An order under this section—
> (a) may make any relief for which it provides or any Community relief subject to conditions, including conditions which are to be complied with after the importation of the goods to which the relief applies ;
> (a) may make any relief for which it provides or any Community relief subject to conditions, including conditions which are to be complied with after the importation of the goods to which the relief applies;
> (b) may, in relation to any relief conferred by order made under this section, contain such incidental and supplementary provisions as the Commissioners think necessary or expedient; and
> (c) may make different provision for different cases.
> (5) In this section—
> - " Community relief" means any relief which is conferred by a Community instrument and is of a kind, or of a kind similar to that, which could otherwise be conferred by order made under this section;
> - " duty " means customs or excise duty chargeable on goods imported into the United Kingdom and, in the case of excise duty, includes any addition to the duty by virtue of section 1 of the Excise Duties (Surcharges or Rebates) Act 1979 ;
> - " legatee " means any person taking under a testamentary disposition or donatio mortis causa or on an intestacy ; and
> - " value added tax" means value added tax chargeable on the importation of goods.
.
- (2) In section 17 of the Customs and Excise Duties (General Reliefs) Act 1979 (parliamentary control of orders and regulations), in subsection (3), after the figure " 4 " there shall be inserted " 7 ".
> “*Community relief*” means any relief which is conferred by a Community instrument and is of a kind, or of a kind similar to that, which could otherwise be conferred by order made under this section;
> “*duty*” means customs or excise duty chargeable on goods imported into the United Kingdom and, in the case of excise duty, includes any addition to the duty by virtue of section 1 of the Excise Duties (Surcharges or Rebates) Act 1979;
> “*legatee*” means any person taking under a testamentary disposition or donation mortis causa or on an intestacy; and
> “*value added tax*” means value added tax chargeable on the importation of goods.
- (2) In section 17 of the Customs and Excise Duties (General Reliefs) Act 1979 (parliamentary control of orders and regulations), in subsection (3), after the figure “4"there shall be inserted “ 7 ”.
- (3) This section shall be deemed to have come into force on 1st July 1984.
@@ -231,25 +155,21 @@
> (1A) The Commissioners may by order make provision supplementing any Community relief, in such manner as they think necessary or expedient.
.
- (3) In subsection (3)(a), after the word " provides " there shall be inserted the words " , or any Community relief, ".
- (4) In subsection (3)(b), after the word " may " there shall be inserted the words " , in relation to any relief conferred by order made under this section, ".
- (3) In subsection (3)(a), after the word “provides" there shall be inserted the words “ , or any Community relief ”.
- (4) In subsection (3)(b), after the word “may" there shall be inserted the words “ , in relation to any relief conferred by order made under this section, ”.
- (5) In subsection (4) there shall be inserted at the appropriate place—
> - ' Community relief' means any relief which is conferred by a Community instrument and is of a kind, or of a kind similar to that, which could otherwise be conferred by order made under this section ;
.
- (6) In section 17 of the Customs and Excise Duties (General Reliefs) Act 1979 (parliamentary control of orders and regullations), in subsection (4), after the figure " 13 " there shall be inserted " (1) ".
> “*Community relief*” means any relief which is conferred by a Community instrument and is of a kind, or of a kind similar to that, which could otherwise be conferred by order made under this section;.
- (6) In section 17 of the Customs and Excise Duties (General Reliefs) Act 1979 (parliamentary control of orders and regulations), in subsection (4), after the figure “13" there shall be inserted “ (1) ”.
- (7) In the Isle of Man Act 1979—
- (a) in section 8 (removal of goods from Isle of Man to United Kingdom), in subsection (3), the words " or under any Community instrument" shall be inserted after the words " imported goods) " and the words " or under the Community instrument in question " shall be added at the end ; and
- (b) in section 9 (removal of goods from United Kingdom to Isle of Man), in subsection (5), the words " or under any Community instrument " shall be added at the end.
- (a) in section 8 (removal of goods from Isle of Man to United Kingdom), in subsection (3), the words “ or under any Community instrument ” shall be inserted after the words “imported goods)" and the words “ or under the Community instrument in question ” shall be added at the end; and
- (b) in section 9 (removal of goods from United Kingdom to Isle of Man), in subsection (5), the words “ or under any Community instrument ” shall be added at the end.
- (8) This section shall be deemed to have come into force on 31st March 1984.
@@ -257,33 +177,17 @@
##### 16
- (1) In paragraph 3(2)(a) and (b) of Schedule 1 to the Car Tax Act 1983 and in paragraph 6(4)(a) and (b) of Schedule 7 to the Value Added Tax Act 1983 (power by regulation to make provision for distress and poinding in connection with unpaid tax) there shall be inserted, after the word " regulations " the words " and for the imposition and recovery of costs, charges, expenses and fees in connection with anything done under the regulations ".
- (1) In paragraph 3(2)(a) and (b) of Schedule 1 to the Car Tax Act 1983 and in paragraph 6(4)(a) and (b) of Schedule 7 to the Value Added Tax Act 1983 (power by regulation to make provision for distress and poinding in connection with unpaid tax) there shall be inserted, after the word “regulations" the words “ and for the imposition and recovery of costs, charges, expenses and fees in connection with anything done under the regulations ”.
- (2) Regulations 58 and 59 of the Value Added Tax (General) Regulations 1980 shall, so far as they relate to costs, charges, expenses and fees in connection with any distraining or poinding occurring after the commencement of this section, have effect as if paragraph 6(4) of Schedule 7 to the Act of 1983 and this section had been in force when those regulations were made.
## PART II — Income Tax, Corporation Tax and Capital Gains Tax etc.
## PART II — INCOME TAX, CORPORATION TAX AND CAPITAL GAINS TAX ETC.
### CHAPTER I — General
#### Charge of income tax for 1984-85
##### 17
- (1) Income tax for the year 1984-85 shall be charged at the basic rate of 30 per cent.; and in respect of so much of an individual's total income as exceeds the basic rate limit (£15,400) at such higher rates as are specified in the Table below :
| Higher rate bands | Higher rate |
| --- | --- |
| The first (£2,800) | 40 per cent. |
| The second (£4,900) | 45 per cent. |
| The third (£7,500) | 50 per cent. |
| The fourth (£7,500) | 55 per cent. |
| The fifth | 60 per cent. |
and paragraphs (a) and (b) of subsection (1) of section 32 of the Finance Act 1971 (charge of tax at the basic and higher rates) shall have effect accordingly.
- (2) The provisions of Schedule 7 to this Act shall have effect with respect to the additional rate for the year 1984-85 and subsequent years of assessment.
- (3) In accordance with the provisions of Schedule 7 to this Act, for the year 1984-85 any sum which, by virtue of any provision of Part III of the Finance Act 1973 or Chapter I of Part III of the Finance Act 1974, is chargeable at the additional rate, as defined for the purposes of that provision, shall be charged to income tax at the additional rate of 15 per cent.
#### Corporation tax for financial years 1983 to 1986: charge, rates and consequential provisions
@@ -446,48 +350,9 @@
##### 26
- (1) In the year 1984-85 and in every subsequent year of assessment the Treasury shall by order made by statutory instrument determine a rate which shall, for the following year of assessment, be—
- (a) the reduced rate for the purposes of section 343 of the Taxes Act (building societies); and
- (b) the composite rate for the purposes of section 27 of this Act.
- (2) The order made under subsection (1) above in each year of assessment shall—
- (a) be made before 31st December in that year; and
- (b) be based only on information relating to periods before the end of the year of assessment in which the order is made.
- (3) Whenever they exercise their powers under this section the Treasury shall aim at securing that (assuming for the purposes of this subsection that the amounts payable by building societies under section 343 of the Taxes Act and by deposit-takers under section 27 of this Act are income tax) the total income tax becoming payable to, and not being repayable by, the Crown is (when regard is had to the operation of those sections) as nearly as may be the same in the aggregate as it would have been if those sections had not been enacted.
- (4) In relation to the exercise of their powers under this section at any time before the year 1988-89, the Treasury may regard subsection (3) above as directed only to amounts payable by building societies under section 343 and to the operation of that section.
- (5) In section 343(1) of the Taxes Act, the proviso and in paragraph (a) the words from " which takes " to " this section " shall cease to have effect as from 6th April 1985.
- (6) An order under this section shall be subject to annulment in pursuance of a resolution of the Commons House of Parliament.
- (7) For the purposes of enabling the Treasury to comply with the requirements of subsection (3) above, the Board may by notice in writing require any deposit-taker (within the meaning of paragraph 2 of Schedule 8 to this Act) or building society to furnish to the Board such information about its depositors as the Board may reasonably require for those purposes; and may so require any deposit-taker at any time before the year 1988-89 notwithstanding subsection (4) above.
- (8) The Table in section 98 of the Taxes Management Act 1970 (penalties) shall be amended by inserting at the end of the first column—
| Section 26 of the Finance Act 1984. |
| --- |
.
- (9) In subsection (7) above " depositors ", in relation to a building society, includes shareholders.
#### Interest paid on deposits with banks etc.
##### 27
- (1) Any deposit-taker making a payment of interest in respect of any relevant deposit shall be liable to account for and pay an amount representing income tax on that payment, calculated by applying the composite rate (determined in accordance with section 26 of this Act) to the grossed-up amount of the payment, that is to say to the amount which after deduction of tax at the composite rate would be equal to the amount actually paid.
- (2) Any payment of interest within subsection (1) above shall be treated as not being within section 54 of the Taxes Act (annual interest).
- (3) Schedule 8 to this Act shall have effect for the purpose of supplementing this section.
- (4) Subject to paragraph 6(1) of Schedule 8, this section applies in relation to payments made after 5th April 1985.
#### Accommodation allowances and expenditure of MPs
@@ -973,35 +838,10 @@
##### 44
- (1) For the purposes of sections 256 to 264 (group income and group relief) and 272 to 281 (groups of companies) of the Taxes Act, a trustee savings bank as defined in section 54(1) of the Trustee Savings Banks Act 1981 shall be deemed to be a body corporate.
- (2) In section 272(2) of the Taxes Act (meaning of "company" in provisions relating to transfer of assets within a group of companies) the following shall be added at the end—
> ; and
> (d) a trustee savings bank as defined in section 54(1) of the Trustee Savings Banks Act 1981.
.
- (3) Subsection (1) above, so far as it applies to sections 256 and 257 of the Taxes Act, has effect in relation to dividends paid, and other payments made, after the passing of this Act and, so far as it applies to sections 258 to 264 of that Act, has effect in relation to any accounting period of the surrendering company ending on or after 20th November 1982.
- (4) Subsection (2) above, and subsection (1) above so far as it applies to sections 272 to 281, shall be deemed to have come into force on 21st November 1982.
#### Pension funds etc.: extension of tax exemptions to dealings in financial futures and traded options
##### 45
- (1) For the purpose of each of the enactments specified in subsection (2) below (which confer on certain pension funds and schemes either exemption from income tax in respect of income derived from investments or exemption from capital gains tax in respect of gains accruing on the disposal of investments) a contract entered into in the course of dealing in financial futures or traded options shall be regarded as an investment.
- (2) The enactments referred to in subsection (1) above are—
- (a) sections 211(2), 214(2), 216(2), 217(2), and 226(6) of the Taxes Act;
- (b) subsections (2) and (7) of section 21 of the Finance Act 1970; and
- (c) subsections (2)(a) and (3) of section 36 of the Finance Act 1980.
- (3) In this section " traded option " means an option which is for the time being quoted on a recognised stock exchange, within the meaning of section 535 of the Taxes Act, or on the London International Financial Futures Exchange.
#### Consortia: group income and relief
##### 46
@@ -1130,72 +970,9 @@
##### 50
- (1) Schedule 11 to this Act shall have effect with respect to the treatment for the purposes of income tax, corporation tax and capital gains tax of the commercial letting of furnished holiday accommodation in the United Kingdom.
- (2) For the purposes of this section a letting—
- (a) is a commercial letting if it is on a commercial basis and with a view to the realisation of profits; and
- (b) is of furnished accommodation if the tenant is entitled to the use of furniture.
- (3) Accommodation shall not be treated as holiday accommodation for the purposes of this section unless—
- (a) it is available for commercial letting to the public generally as holiday accommodation for periods which amount, in the aggregate, to not less than 140 days ;
- (b) the periods for which it is so let amount, in the aggregate, to at least 70 days ; and
- (c) for a period comprising at least seven months (which need not be continuous but includes any months in which it is let as mentioned in paragraph (b) above) it is not normally in the same occupation for a continuous period exceeding 31 days.
- (4) Any question whether accommodation let by any person other than a company is, at any time in a year of assessment, holiday accommodation shall be determined—
- (a) if the accommodation was not let by him as furnished accommodation in the preceding year of assessment but is so let in the following year of assessment, by reference to the 12 months beginning with the date on which he first so let it in the year of assessment;
- (b) if the accommodation was let by him as furnished accommodation in the preceding year of assessment but is not so let in the following year of assessment, by reference to the 12 months ending with the date on which he ceased so to let it in the year of assessment ; and
- (c) in any other case, by reference to the year of assessment.
- (5) Any question whether accommodation let by a company is at any time in an accounting period holiday accommodation shall be determined—
- (a) if the accommodation was not let by it as furnished accommodation in the period of 12 months immediately preceding the accounting period but is so let in the period of 12 months immediately following the accounting period, by reference to the 12 months beginning with the date in the accounting period on which it first so let it;
- (b) if the accommodation was let by it as furnished accommodation in the period of 12 months immediately preceding the accounting period but is not so let by it in the period of 12 months immediately following the accounting period, by reference to the 12 months ending with the date in the accounting period on which it ceased so to let it; and
- (c) in any other case, by reference to the period of 12 months ending with the last day of the accounting period.
- (6) Where, in any year of assessment or accounting period, a person lets furnished accommodation which is treated as holiday accommodation for the purposes of this section in that year or period (" the qualifying accommodation "), he may make a claim under this subsection, within two years after that year or period, for averaging treatment to apply for that year or period to that and any other accommodation specified in the claim which was let by him as furnished accommodation during that year or period and would fall to be treated as holiday accommodation in that year or period if paragraph (b) of subsection (3) were satisfied in relation to it.
- (7) Where a claim is made under subsection (6) above in respect of any year of assessment or accounting period, any such other accommodation shall be treated as being holiday accommodation in that year or period if the number of days for which the qualifying accommodation and any other such accommodation was let by the claimant as mentioned in paragraph (a) of subsection (3) above during the year or period amounts on average to at least 70.
- (8) Qualifying accommodation may not be specified in more than one claim in respect of any one year of assessment or accounting period.
- (9) For the purposes of this section a person lets accommodation if he permits another person to occupy it, whether or not in pursuance of a lease ; and " letting " and " tenant" shall be construed accordingly.
- (10) This section has effect—
- (a) for the purposes of income tax for the year 1982-83 and subsequent years of assessment;
- (b) for the purposes of capital gains tax and corporation tax on chargeable gains—
- (i) in so far as it applies in relation to sections 115 to 120 of the Capital Gains Tax Act 1979, where the acquisition of, or of the interest in, the new assets takes place on or after 6th April 1982, and
- (ii) otherwise, in relation to disposals made on or after that date ; and
- (c) for the purposes of corporation tax, otherwise than on chargeable gains, in relation to accounting periods commencing in the financial year 1982 and subsequent periods.
#### Taxation of woodlands
##### 51
- (1) In section 92 of the Taxes Act, after subsection (3) (meaning of " occupier" for purposes of Schedule B), there shall be inserted the following subsection—
> (4) A person who, in connection with any trade carried on by him, has the use of any woodlands wholly or mainly for the purpose of—
> (a) felling, processing or removing timber ; or
> (b) clearing or otherwise preparing the lands, or any part of them, for replanting ;
> shall not be treated as an occupier of the lands for the purposes of Schedule B and subsections (1) and (2) above.
.
- (2) This section has effect in relation to any use commencing after 13th March 1984.
#### Carry back of surplus ACT
@@ -1278,45 +1055,25 @@
##### 56
- (1) Section 341A of the Taxes Act (tax exemptions for self-build societies) shall extend to Northern Ireland and in subsection (11) (definitions) after the words " Part I of the Housing Act 1974 " there shall be inserted the words " or, in Northern Ireland, Part VII of the Housing (Northern Ireland) Order 1981 " and at the end of the section there shall be added the following subsection:—
> (12) In the application of this section to Northern Ireland—
> (a) any reference in subsections (4) to (6) above to the Secretary of State shall be construed as a reference to the Department of the Environment for Northern Ireland;
> (b) the reference in subsection (4)(a) to the Industrial and Provident Societies Act 1965 shall be construed as a reference to the Industrial and Provident Societies Act (Northern Ireland) 1969 ; and
> (c) in subsection (6) any reference to a statutory instrument shall be construed as a reference to a statutory rule for the purposes of the Statutory Rules (Northern Ireland) Order 1979 and for the words from " annulment" onwards there shall be substituted the words " negative resolution within the meaning of section 41(6) of the Interpretation Act (Northern Ireland) 1954
."
- (2) In consequence of the amendments effected by subsection (1) above, in section 29 of the Finance Act 1982 (supplementary regulations as to deduction of tax from certain loan interest) subsection (1)(b) (self-build societies) shall be amended as follows:—
- (a) after the words "Part I of the Housing Act 1974" there shall be added the words " or, in Northern Ireland, Part VII of the Housing (Northern Ireland) Order 1981 "; and
- (b) at the end there shall be added the words " or Northern Ireland ".
- (3) After section 342A of the Taxes Act there shall be inserted the following section—
> (342B)
> (1) In any case where—
> (a) a registered Northern Ireland housing association disposes of any land to another such association, or
> (b) in pursuance of a direction of the Department of the Environment for Northern Ireland given under Chapter II of Part VII of the Housing (Northern Ireland) Order 1981 requiring it to do so, a registered Northern Ireland housing association disposes of any of its property, other than land, to another such association,
> both parties to the disposal shall be treated for the purposes of corporation tax in respect of chargeable gains as if the land or property disposed of were acquired from the association making the disposal for a consideration of such an amount as would secure that on the disposal neither a gain nor a loss accrued to that association.
> (2) In subsection (1) above " registered Northern Ireland housing association" means a registered housing association within the meaning of Part VII of the Order referred to in paragraph (b) of that subsection.
- (4) Subsection (1) above has effect for the year 1984-85 and subsequent years of assessment and subsection (3) above has effect with respect to disposals on or after 6th April 1984.
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Proceedings in magistrates' courts and county courts
##### 57
- (1) In section 65 of the Taxes Management Act 1970 (recovery of assessed tax in magistrates' courts)—
- (a) in subsection (1) for " £50" in each place where it occurs there shall be substituted " £250 ";
- (b) in subsection (4) for the words from " in the manner " to the end there shall be substituted the words " in proceedings under Article 62 of the Magistrates' Courts (Northern Ireland) Order 1981 "; and
- (1) In section 65 of the Taxes Management Act 1970 (recovery of assessed tax in magistrates’ courts)—
- (a) in subsection (1) for “£50" in each place where it occurs there shall be substituted “ £250 ”;
- (b) in subsection (4) for the words from “in the manner" to the end there shall be substituted the words “ in proceedings under Article 62 of the Magistrates’ Courts (Northern Ireland) Order 1981 ”; and
- (c) at the end of that section there shall be added the following subsection—
> (5) The Treasury may by order made by statutory instrument increase the sums specified in subsection (1) above; and any such statutory instrument shall be subject to annulment in pursuance of a resolution of the Commons House of Parliament.
> (5) The Treasury may by Order made by statutory instrument increase the sums specified in subsection (1) above; and any such statutory instrument shall be subject to annulment in pursuance of a resolution of the Commons House of Parliament.
- (2) In section 66 of that Act (recovery of assessed tax in county courts) for subsection (2) there shall be substituted the following subsection—
@@ -1327,32 +1084,6 @@
#### Withdrawal of initial and first year allowances
##### 58
- (1) Each of the following allowances in respect of capital expenditure, namely,—
- (a) initial allowances under section 1 of the Capital Allowances Act 1968 (industrial buildings and structures),
- (b) first-year allowances under section 41 of the Finance Act 1971 (machinery and plant), and
- (c) initial allowances under Schedule 12 to the Finance Act 1982 (dwelling-houses let on assured tenancies),
shall be progressively withdrawn in accordance with Part I of Schedule 12 to this Act.
- (2) Part II of Schedule 12 to this Act shall have effect—
- (a) to provide transitional relief in respect of certain capital expenditure incurred in connection with projects in development areas and Northern Ireland; and
- (b) with respect to the treatment of certain capital expenditure incurred in the financial years 1984 and 1985 under contracts entered into after 13th March 1984 and on or before 31st March 1986.
- (3) In paragraph 8 of Schedule 8 to the Finance Act 1971 (special rules for new ships) in sub-paragraph (2)(b) for the words " the expenditure to which the allowance relates " there shall be substituted the words " so much of the expenditure as is equal to the whole allowance. "
- (4) Nothing in subsection (1)(a) above or in paragraph 1 of Schedule 12 to this Act affects the continuing operation of—
- (a) paragraph 1 of Schedule 6 to the Finance Act 1978 (20 per cent. initial allowance for capital expenditure in respect of hotels); or
- (b) paragraph 1 of Schedule 13 to the Finance Act 1980 (100 per cent, initial allowance for capital expenditure in respect of industrial buildings etc. in enterprise zones and for capital expenditure incurred before 27th March 1985 in respect of small workshops);
and paragraph 5 of Schedule 12 to this Act does not apply to expenditure in respect of which the rate of initial allowance is determined by the provision referred to in paragraph (b) above.
#### Disclaimer of writing-down and first-year allowances
@@ -1484,254 +1215,51 @@
##### 63
- (1) In the Capital Gains Tax Act 1979,—
- (a) section 6 (gains accruing to an individual on gifts of assets not exceeding £100 in any year not to be chargeable gains), and
- (b) sections 8 and 9 (postponement of payment of tax),
shall cease to have effect.
- (2) In section 107 of that Act (small part disposals of land) in each of paragraphs (a) and (b) of subsection (3) (the monetary limits) for " £10,000 " there shall be substituted " £20,000 ".
- (3) In section 80 of the Finance Act 1980 (exemption for gains on letting of private residences) in subsection (1)(b) (the monetary limit) for "£10,000" there shall be substituted " £20,000 ".
- (4) In section 124 of the Capital Gains Tax Act 1979 (relief for transfer of business on retirement) in subsection (3) (the monetary limits)—
- (a) in paragraph (a) for " £50,000 ", there shall be substituted " £100,000 "; and
- (b) in paragraph (b) for " £10,000 ", in each place where it occurs, there shall be substituted " £20,000 ".
- (5) Subsection (1) above has effect with respect to disposals on or after 6th April 1984 and subsections (2) to (4) above have effect with respect to disposals on or after 6th April 1983.
#### Exemption for qualifying corporate bonds
##### 64
- (1) Part I of Schedule 13 to this Act shall have effect for the purpose of—
- (a) providing, in relation to qualifying corporate bonds, an exemption from capital gains tax and corporation tax on chargeable gains similar to that provided in relation to gilt-edged securities by Part IV of the Capital Gains Tax Act 1979 ; and
- (b) making corresponding amendments of other enactments.
- (2) For the purposes of this section, a " corporate bond " is a security, as defined in section 82(3) (b) of the Capital Gains Tax Act 1979,—
- (a) which, from the time of its issue, has been quoted on a recognised stock exchange in the United Kingdom or dealt in on the Unlisted Securities Market or which was issued by a body of which, at the time of the issue, any other share, stock or security was so quoted or dealt in; and
- (b) the debt on which represents and has at all times represented a normal commercial loan, as defined in paragraph 1(5) of Schedule 12 to the Finance Act 1973 ; and
- (c) which is expressed in sterling and in respect of which no provision is made for conversion into, or redemption in, a currency other than sterling.
- (3) For the purposes of subsection (2)(c) above,—
- (a) a security shall not be regarded as expressed in sterling if the amount of sterling falls to be determined by reference to the value at any time of any other currency or asset; and
- (b) a provision for redemption in a currency other than sterling but at the rate of exchange prevailing at redemption shall be disregarded.
- (4) Subject to subsection (6) below, for the purposes of this section and Schedule 13 to this Act, a corporate bond—
- (a) is a " qualifying " corporate bond if it is issued after 13th March 1984 ; and
- (b) becomes a " qualifying " corporate bond if, having been issued on or before that date, it is acquired by any person after that date and that acquisition is not as a result of a disposal which is excluded for the purposes of this subsection.
- (5) Where a person disposes of a corporate bond which was issued on or before 13th March 1984 and, before the disposal, the bond had not become a qualifying corporate bond, the disposal is excluded for the purposes of subsection (4) above if, by virtue of any enactment,—
- (a) the disposal is treated for the purposes of the Capital Gains Tax Act 1979 as one on which neither a gain nor a loss accrues to the person making the disposal; or
- (b) the consideration for the disposal is treated for the purposes of that Act as reduced by an amount equal to the held-over gain on that disposal, as defined for the purposes of section 126 of that Act or section 79 of the Finance Act 1980.
- (6) A security which is issued by a member of a group of companies to another member of the same group is not a qualifying corporate bond for the purposes of this section or Schedule 13 to this Act; and references in this subsection to a group of companies or to a member of a group shall be construed in accordance with section 272 of the Taxes Act.
- (7) Part II of Schedule 13 to this Act shall have effect in any case where a transaction occurs of such a description that, apart from the provisions of that Schedule,—
- (a) sections 78 to 81 of the Capital Gains Tax Act 1979 would apply by virtue of any provision of Chapter II of Part IV of that Act; and
- (b) either the original shares would consist of or include a qualifying corporate bond and the new holding would not, or the original shares would not and the new holding would consist of or include such a bond ;
and in paragraph (b) above " the original shares " and " the new holding " have the same meaning as they have for the purposes of the said sections 78 to 81.
- (8) For the purposes of this section, in any case where—
- (a) a security is comprised in a letter of allotment or similar instrument, and
- (b) the right to the security thereby conferred remains provisional until accepted,
the security shall not be treated as issued until there has been acceptance.
#### Traded options
##### 65
- (1) In section 137(4)(aa) of the Capital Gains Tax Act 1979 (abandonment of traded option to buy or sell shares in a company) and section 138(1)(aa) of that Act (restriction of allowable expenditure in relation to such an option) the words " to buy or sell shares in a company " shall be omitted.
- (2) At the end of section 137(9) of that Act (definition of " traded option ") there shall be added the words " or on the London International Financial Futures Exchange ".
- (3) This section has effect in relation to any abandonment or other disposal on or after 6th April 1984.
#### Disposals and acquisitions treated as made at market value: removal of certain exceptions
##### 66
- (1) In section 29A of the Capital Gains Tax Act 1979 (certain disposals and acquisitions treated as made at market value) in subsection (2) (which, among other things, excludes certain acquisitions where the corresponding disposal is made by an excluded person) the words " Except in the case specified in subsection (4) below " and, in paragraph (a), the words " or the corresponding disposal is made by an excluded person " shall be omitted.
- (2) For subsections (3) and (4) of the said section 29A there shall be substituted the following subsections:—
> (3) In any case where—
> (a) apart from this subsection, subsection (1) above would apply to the acquisition of an asset, and
> (b) the condition in subsection (2)(b) above is fulfilled with respect to the acquisition, and
> (c) the corresponding disposal is made on or after 6th April 1983 and before 6th April 1985, and
> (d) the corresponding disposal is made by an excluded person who is within the charge to capital gains tax or corporation tax in respect of any chargeable gain accruing to him on the disposal,
> then, if the person acquiring the asset and the excluded person so elect by notice in writing given to the Board within the period of two years beginning at the end of the chargeable period in which the corresponding disposal is made, subsection (1) above shall not apply to the acquisition or the corresponding disposal.
> (4) There shall be made all such adjustments of capital gains tax or corporation tax (in respect of chargeable gains), whether by way of assessment or by way of discharge or repayment of tax, as may be required in consequence of the making of an election under subsection (3) above.
- (3) Subsections (5) and (6) of section 32 of the Capital Gains Tax Act 1979 (special rules as to sums allowable on account of expenditure in certain cases of disposals by non-residents) shall not apply where the disposal by the person who is neither resident nor ordinarily resident in the United Kingdom is made on or after 6th April 1985.
- (4) Subsections (1) and (2) above have effect in relation to acquisitions and disposals on or after 6th April 1983.
#### Parallel pooling
##### 67
- (1) Schedule 6 to the Finance Act 1983 (election for pooling) shall have effect, and be deemed always to have had effect, with the amendments set out in the following provisions of this section.
- (2) In paragraph 1 (interpretation) at the end of sub-paragraph (2) (which excludes certain assets from being qualifying securities for the purposes of that Schedule) there shall be added the words
> nor
> (c) securities which are, or have at any time after the expiry of the period which, in relation to a disposal of them, would be the qualifying period, been material interests in a non-qualifying offshore fund, within the meaning of Chapter VII of Part II of the Finance Act 1984
.
- (3) In sub-paragraph (5) of paragraph 3 (effect of election: time when the holding comes into being) in paragraph (b) for the words " on 1st April 1982 " there shall be substituted the words " immediately before 1st April 1982 ".
- (4) In paragraph 9 (transfers on a no gain/no loss basis) for sub-paragraphs (2) and (3) there shall be substituted the following sub-paragraphs:—
> (2) The disposal referred to in sub-paragraph (1) above shall be regarded for the purposes of this Schedule as an operative event.
> (3) Notwithstanding anything in paragraph 2 of Schedule 13 to the 1982 Act, the amount which, on the disposal referred to in sub-paragraph (1) above, is to be regarded as the consideration given by the second company for the acquisition of the securities (and, accordingly, the amount which is to be added to that company's unindexed pool of expenditure on the disposal) shall not include the indexation allowance on that disposal.
> (4) Nothing in sub-paragraph (3) above affects the amount which, by virtue of paragraph 2(3) of Schedule 13 to the 1982 Act, is to be treated as the consideration received by the first company on the disposal referred to in sub-paragraph (1) above, and it shall be that amount (rather than the smaller amount referred to in sub-paragraph (3) above) which, on that disposal, shall be added to the second company's indexed pool of expenditure.
> (5) Paragraph 3 of Schedule 13 to the 1982 Act shall not apply on any subsequent disposal of the holding in which the securities referred to in sub-paragraph (1) above are comprised.
#### Maintenance funds for historic buildings
##### 68
In consequence of the operation of section 79 of the Finance Act 1980 (general relief for gifts) section 148 of the Capital Gains Tax Act 1979 (specific relief in the case of certain disposals relating to maintenance funds for historic buildings) shall cease to have effect with respect to disposals made on or after 6th April 1984.
#### Foreign currency accounts
##### 69
- (1) At the end of subsection (4) of section 18 of the Capital Gains Tax Act 1979 (1ocation of assets) there shall be added the following paragraph—
> (j) a debt which—
> (i) is owed by a bank, and
> (ii) is not in sterling, and
> (iii) is represented by a sum standing to the credit of an account in the bank of an individual who is not domiciled in the United Kingdom,
> is situated in the United Kingdom if and only if that individual is resident in the United Kingdom and the branch or other place of business of the bank at which the account is maintained is itself situated in the United Kingdom.
- (2) Subsection (1) above shall be deemed to have come into force on 6th April 1983.
#### Postponement of tax due from beneficiaries on gains of non resident trustees
##### 70
- (1) The provisions of Schedule 14 to this Act have effect in any case where,—
- (a) before 6th April 1981, a chargeable gain accrued to the trustees of a settlement in such circumstances that section 17 of the Capital Gains Tax Act 1979 (non-resident trust) applies as respects that chargeable gain ; and
- (b) by virtue of that section a beneficiary under the settlement is treated for the purposes of that Act as if, in the year 1983-84 or any earlier year of assessment, an amount determined by reference to the chargeable gain which accrued to the trustees or, as the case may be, the whole or part of that gain had been a chargeable gain accruing to the beneficiary; and
- (c) at 29th March 1983 some or all of the capital gains tax payable in respect of the chargeable gain accruing to the beneficiary had not been paid.
- (2) In subsection (3)(b) of the said section 17 (which relates to capital payments which are made in the exercise of a discretion, which are received at any time and which represent a chargeable gain to which that section applies) after the words " after the chargeable gain accrues " there shall be inserted the words " but before 6th April 1984 ".
- (3) In consequence of the amendment made by subsection (2) above, in section 80 of the Finance Act 1981 (new provisions as to gains of non-resident settlements) in subsection (8) (which, among other things, excludes from the scope of that section payments received on or after 10th March 1981 so far as they represent chargeable gains accruing to the trustees before 6th April 1981) after the words "received on or after that date" there shall be inserted the words " and before 6th April 1984 ".
- (4) In this section and Schedule 14 to this Act " settlement", " settlor " and " settled property " have the same meaning as in section 17 of the Capital Gains Tax Act 1979.
#### Non-resident settlements: definition of " settlement " and " settlor "
##### 71
- (1) At the end of section 83 of the Finance Act 1981 (definitions etc. for provisions relating to gains of non-resident settlements) there shall be added the following subsection—
> (7) In sections 80 to 82 above and in the preceding provisions of this section—
> - " settlement " and " settlor " have the meaning given by section 454(3) of the Taxes Act and " settlor " includes, in the case of a settlement arising under a will or intestacy, the testator or intestate ; and
> - " settled property " shall be construed accordingly.
- (2) This section has effect for the year 1984-85 and subsequent years of assessment.
### CHAPTER IV — Insurance
#### Withdrawal of life assurance premium relief
##### 72
- (1) Relief shall not be granted under section 19 of the Taxes Act (premium relief on post-1916 life policies etc.) in respect of premiums payable under any policy issued in respect of an insurance made after 13th March 1984, except where the relief relates to part only of any such payment as falls within paragraph 11 of Schedule 3 to the Finance Act 1978 (part payments to friendly societies).
- (2) A policy which was issued in the course of industrial assurance business, within the meaning of the Industrial Assurance Act 1923 or, as the case may be, the Industrial Assurance (Northern Ireland) Order 1979, and which was so issued in respect of an insurance made after 13th March 1984 shall be treated for the purposes of this section as issued in respect of an insurance made on or before that date if—
- (a) the proposal form for the policy was completed on or before that date, and
- (b) on or before 31st March 1984 the policy was prepared for issue by the company or society concerned, and
- (c) on or before 31st March 1984 and in accordance with the normal business practice of the company or society a permanent record of the preparation of the policy was made in any book or by any other means kept or instituted by the company or society for the purpose.
- (3) For the purposes of subsection (1) above, a policy of life insurance which was issued in respect of an insurance made on or before 13th March 1984 shall be treated as issued in respect of an insurance made after that date if the policy is varied after that date so as to increase the benefits secured or to extend the term of the insurance.
- (4) If a policy of life insurance which was issued as mentioned in subsection (3) above confers on the person to whom it was issued an option to have another policy substituted for it or to have any of its terms changed, then, for the purposes of that subsection and subsection (1) above, any change in the terms of the policy which is made in pursuance of the option shall be deemed to be a variation of the policy.
- (5) In subsection (8) of section 7 of the Finance Act 1975 (early surrender or conversion of life policies), after the word " apply " in the second place where it occurs, and in subsection (5) of section 8 of that Act (surrender etc. of policies after four years), after the word " apply ", there shall be inserted—
> (a) to a policy in respect of the premiums on which relief under section 19 of that Act is not available, by virtue of section 72 of the Finance Act 1984 ; or
> (b)
.
- (6) In any case where—
- (a) one policy is replaced by another in such circumstances that the provisions of subsection (1) of section 34 of the Finance Act 1982 apply (variation in life or fives assured), and
- (b) the earlier policy was issued in respect of an insurance made on or before 13th March 1984, and
- (c) the later policy confers on the life or lives assured thereby benefits which are substantially equivalent to those which would have been enjoyed by the life or lives assured under the earlier policy, if that policy had continued in force,
then, for the purposes of subsection (1) above, the insurance in respect of which the later policy is issued shall be deemed to have been made before 13th March 1984; and in this subsection " the earlier policy " and " the later policy " have the same meaning as in the said section 34.
- (7) In any case where—
- (a) there is a substitution of policies falling within sub-paragraph (1) or sub-paragraph (3) of paragraph 2 of Schedule 15 to this Act, and
- (b) the old policy was issued in respect of an insurance made on or before 13th March 1984,
then, for the purposes of subsection (1) above, the insurance in respect of which the new policy is issued shall be deemed to have been made before 13th March 1984 ; and in this subsection " the old policy " and " the new policy " have the same meaning as in paragraph 9 of Schedule 1 to the Taxes Act.
- (8) In any case where, before the passing of this Act—
- (a) an individual, in exercise of the right conferred on him by paragraph 5(a) of Schedule 4 to the Finance Act 1976, has deducted an amount from a payment in respect of a premium falling within subsection (1) above, and
- (b) in accordance with paragraphs 4(1) and 5(b) of that Schedule, the Board have made good to the person to whom that payment was made the deficiency arising from that deduction,
then, without prejudice to any other power of the Board to recover sums which have been paid to make good any such deficiency (being a deficiency which would not have arisen if this Act had been in force on the date referred to in subsection (1) above), those sums may be recovered by the Board by deduction from any further sums which, after the passing of this Act, fall to be paid to the person concerned in accordance with the said paragraphs 4(1) and 5(b).
- (9) The aggregate of any amounts which, as mentioned in subsection (8)(a) above, an individual has deducted from payments in respect of premiums falling within subsection (1) above may be recovered by the person to whom those payments were made as if it were an additional premium due under the policy on 5th August 1984; but no account shall be taken of that additional premium—
- (a) in determining whether the policy is a qualifying policy within the meaning of Schedule 1 to the Taxes Act; or
- (b) for the purposes of section 334 of that Act (conditions for tax exempt business); or
- (c) for the purposes of section 395 of that Act or paragraph 9 of Schedule 2 to the Finance Act 1975 (chargeable events legislation).
#### Insurance business of registered friendly societies
##### 73
- (1) In relation to registered friendly societies, references to tax exempt life or endowment business, as defined in section 337(3) of the Taxes Act, shall be construed in accordance with subsections (2) and (3) below.
- (2) In so far as the profits of a registered friendly society from life or endowment business relate to contracts made after 13th March 1984, the references in subsections (2) and (3) of section 332 of the Taxes Act (business exempt from income tax and corporation tax) to £500 and £104 (the basic limits for gross sums assured and annuities) shall have effect as references to £750 and £156 respectively.
- (3) Subsection (5) of the said section 332 (which, in the case of certain registered friendly societies, increases the tax exempt limits in subsections (2) and (3) of that section to £2,000 and £416) shall not have effect with respect to sums assured or annuities granted under contracts made after 13th March 1984.
- (4) In consequence of the preceding provisions of this section and subsection (5) below, in section 1 of the Friendly Societies Act (Northern Ireland) 1970 and section 7 of the Friendly Societies Act 1974 (societies which may be registered),—
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) In consequence of the preceding provisions of this section and subsection (5) below, in . . . section 7 of the Friendly Societies Act 1974 (societies which may be registered),—
- (a) paragraph (a) of subsection (3), and
@@ -1739,67 +1267,37 @@
shall not have effect with respect to benefits secured by contracts made after 13th March 1984.
- (5) In the following enactments which specify, in relation to tax exempt life or endowment business, maximum benefits which may be provided for members, and persons claiming through members, of registered friendly societies, namely,—
- (a) subsection (1) of section 55 of the Friendly Societies Act (Northern Ireland) 1970; and
- (b) subsection (1) of section 64 of the Friendly Societies Act 1974,
in paragraph (a) for " £2,000 " there shall be substituted " £750 " and in paragraph (b) for "£416" there shall be substituted " £156 ".
- (6) The amendments made by subsection (5) above have effect—
- (a) in relation to benefits secured by contracts made after 13th March 1984; and
- (b) in relation to the aggregate of the benefits secured by contracts made after that day and those secured by contracts made on or before that day.
- (7) If, after 13th March 1984, the committee of a registered society or branch whose rules make provision for it to carry on life or endowment business resolve to accept, in respect of any contract falling within subsection (8) below, premiums of amounts arrived at by deducting 15 per cent, from the premiums provided for by the rules of the society or branch (that is to say by deducting the same amount as, apart from section 72 above, would have been deductible by way of relief under section 19 of the Taxes Act),—
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) If, after 13th March 1984, the committee of a registered society or branch whose rules make provision for it to carry on life or endowment business resolve to accept, in respect of any contract falling within subsection (8) below, premiums of amounts arrived at by deducting 15 per cent. from the premiums provided for by the rules of the society or branch (that is to say by deducting the same amount as, apart from section 72 above, would have been deductible by way of relief under section 19 of the Taxes Act),—
- (a) the resolution shall be deemed to be permitted by the principal Act and the rules of the society or branch; and
- (b) nothing in the principal Act shall require the registration of the resolution ; and
- (b) nothing in the principal Act shall require the registration of the resolution; and
- (c) together with the annual return of the society or branch for the year of account ending 31st December 1984, the society or branch shall send a copy of the resolution to the registrar.
- (8) Subsection (7) above applies to any contract entered into by a registered society or branch—
- (a) which is for the assurance under life or endowment business of any gross sum ; and
- (a) which is for the assurance under life or endowment business of any gross sum; and
- (b) which is entered into pursuant to a proposal received by the society or branch on or before 13th March 1984; and
- (c) which is one which the society might lawfully have entered into on that date ; and
- (c) which is one which the society might lawfully have entered into on that date; and
- (d) which is entered into after 13th March 1984 and before 1st May 1984.
- (9) In subsection (7) above " the principal Act " means, according to the enactment under which the society or branch is registered,—
- (a) the Friendly Societies Act (Northern Ireland) 1970 ; or
- (b) the Friendly Societies Act 1974 ;
- (9) In subsection (7) above “*the principal Act*” means, according to the enactment under which the society or branch is registered,—
- (a) the Friendly Societies Act (Northern Ireland) 1970; or
- (b) the Friendly Societies Act 1974;
and subsections (7) and (8) shall be construed as one with the principal Act.
#### Disqualification of certain life insurance policies
##### 74
- (1) In section 30 of the Finance Act 1980 (in this section referred to as the " principal section ")—
- (a) in subsection (1) (certain life insurance policies not to be qualifying policies) for the words " the terms of which" there shall be substituted the words " and the terms of either policy "; and
- (b) in subsection (3) (definition of " policy " by reference to ordinary long-term insurance business) for the words from " ordinary " to " and " there shall be substituted the words " long term business, as defined in section 1 of the Insurance Companies Act 1982, and ".
- (2) Subsections (6) and (7) of the principal section (commencement) shall have effect in relation to the principal section as amended by subsection (1) above as if for the words " 26th March 1980", in each place where they occur, there were substituted the words " 23rd August 1983 " ; but nothing in this subsection affects the operation of the principal section in relation to a policy to which it would have applied apart from subsection (1) above.
- (3) In any case where payments made—
- (a) after 22nd August 1983, and
- (b) by way of premium or other consideration in respect of a policy issued in respect of an insurance made before that date,
exceed £5 in any period, of twelve months, the policy shall be treated for the purposes of the principal section as if it were issued in respect of an insurance made after 22nd August 1983 ; but nothing in that section shall apply with respect to any premium paid in respect of it before that date.
- (4) In subsections (2) and (3) above " policy " means a policy issued in the course of ordinary long-term insurance business as defined in section 96(1) of the Insurance Companies Act 1982 and includes any such policy issued outside the United Kingdom.
#### Life policies: chargeable events
@@ -1846,203 +1344,27 @@
##### 77
- (1) No advance corporation tax shall be repaid to a company under section 17(3) of the Oil Taxation Act 1975 (advance corporation tax which cannot be set off in an accounting period because the income limit has been reduced by the deduction of payments of petroleum revenue tax) if it is advance corporation tax paid by the company in respect of a distribution made in an accounting period of the company ending on or after 1st April 1984.
- (2) The reference in subsection (1) above to advance corporation tax paid by the company in respect of a distribution in a particular accounting period is a reference to—
- (a) advance corporation tax which is actually paid by the company in respect of such a distribution ; and
- (b) advance corporation tax which, by virtue of section 85(4) or section 92(2) of the Finance Act 1972 (tax carried forward or surrendered to a subsidiary), is treated as paid by the company in respect of such a distribution.
#### Transfers of interests in oil fields: capital allowances
##### 78
- (1) This section applies where,—
- (a) there is, for the purposes of Schedule 17 to the Finance Act 1980, a transfer by a participator in an oil field of the whole or part of his interest in the field ; and
- (b) in pursuance of that transfer, the old participator disposes of, and the new participator acquires, machinery or plant used, or expected to be used, in connection with the field, or a share in such machinery or plant.
- (2) In the application of Chapter I of Part III of the Finance Act 1971 (capital allowances) to expenditure incurred by the new participator in the acquisition referred to in subsection (1)(b) above, there shall be disregarded so much (if any) of that expenditure as exceeds—
- (a) the disposal value to be brought into account by the old participator under section 44 of that Act (balancing adjustments etc.) by reason of the disposal; or
- (b) if subsection (2) of section 41 of that Act applies in relation to the old participator (machinery or plant disposed of before being brought into use), the amount of the expenditure in respect of which, but for that subsection, a first year allowance would have been made (and not withdrawn).
- (3) In this section—
- (a) " machinery or plant" has the same meaning as in Chapter I of Part III of the Finance Act 1971 (capital allowances);
- (b) subsection (7) of section 50 of that Act applies to any reference to a share in machinery or plant; and
- (c) " the old participator " and " the new participator " have the same meaning as in Schedule 17 to the Finance Act 1980;
and, subject thereto, expressions used in subsection (1) above have the same meaning as in Part I of the Oil Taxation Act 1975 and expressions used in subsection (2) above have the same meaning as in Chapter I of Part III of the Finance Act 1971.
- (4) Nothing in this section affects the operation of paragraph 3 of Schedule 8 to the Finance Act 1971 (which restricts allowable expenditure on sales between connected persons etc.).
- (5) This section applies where the acquisition referred to in subsection (1)(b) above occurs on or after 13th March 1984.
#### Gains on certain disposals
##### 79
- (1) This section applies where, on or after 13th March 1984 and in pursuance of a transfer by a participator in an oil field of the whole or part of his interest in the field, there is—
- (a) a disposal of an interest in oil to be won from the oil field; or
- (b) a disposal of an asset used in connection with the field;
and section 12 of the Oil Taxation Act 1975 (interpretation of Part I of that Act) applies for the interpretation of this subsection and the reference to the transfer by a participator in an oil field of the whole or part of his interest in the field shall be construed in accordance with paragraph 1 of Schedule 17 to the Finance Act 1980.
- (2) In this section " disposal" has the same meaning as in the Capital Gains Tax Act 1979 and "material disposal" means—
- (a) a disposal falling within paragraph (a) or paragraph (b) of subsection (1) above ; or
- (b) the sale of an asset referred to in subsection (3) of section 278 of the Taxes Act (company ceasing to be a member of a group: notional sale and repurchase of asset acquired from another member) where the asset was acquired by the chargeable company (within the meaning of that section) on a disposal falling within one of those paragraphs.
- (3) For any chargeable period (within the meaning of the Taxes Act) in which a chargeable gain or allowable loss accrues to any person (in the following provisions of this section referred to as " the chargeable person ") on a material disposal (whether taking place in that period or not), subject to subsection (7) below there shall be aggregated—
- (a) the chargeable gains accruing to him in that period on such disposals, and
- (b) the allowable losses accruing to him in that period on such disposals,
and the lesser of the two aggregates shall be deducted from the other to give an aggregate gain or, as the case may be, an aggregate loss for that chargeable period.
- (4) For the purposes of capital gains tax and corporation tax in respect of capital gains,—
- (a) the several chargeable gains and allowable losses falling within paragraphs (a) and (b) of subsection (3) above shall be left out of account; and
- (b) the aggregate gain or aggregate loss referred to in that subsection shall be treated as a single chargeable gain or allowable loss accruing to the chargeable person in the chargeable period concerned on the notional disposal of an asset; and
- (c) if in any chargeable period there is an aggregate loss, then, except as provided by subsection (6) below, it shall not be allowable as a deduction against any chargeable gain arising in that or any later period, other than an aggregate gain treated as accruing in a later period by virtue of paragraph (b) above (so that the aggregate gain of that later period shall be reduced or extinguished accordingly); and
- (d) if in any chargeable period there is an aggregate gain, no loss shall be deducted from it except in accordance with paragraph (c) above ; and
- (e) without prejudice to any indexation allowance which was taken into account in determining an aggregate gain or aggregate loss under subsection (3) above, no further indexation allowance shall be allowed on a notional disposal referred to in paragraph (b) above.
- (5) Where, in accordance with subsection (3) above, the chargeable person has an aggregate gain, that gain (reduced in the case of companies in accordance with section 93 of the Finance Act 1972) and his ring fence income (if any) for the chargeable period concerned together constitute, for the purposes of this section, his ring fence profits for that period and, in relation to the chargeable person, in subsections (2), (3) and (5) of section 13 and in section 15 of the Oil Taxation Act 1975 (1imitations on losses and charges etc. to be set against income) any reference to income arising from oil extraction activities or from oil rights shall be construed, except in relation to relief under section 168 of the Taxes Act and section 71 of the Capital Allowances Act 1968, as a reference to his ring fence profits.
- (6) In any case where—
- (a) by virtue of subsection (4)(b) above, an aggregate loss is treated as accruing to the chargeable person in any chargeable period, and
- (b) before the expiry of the period of two years beginning at the end of the chargeable period concerned, the chargeable person makes a claim under this subsection,
the whole, or such portion as is specified in the claim, of the aggregate loss shall be treated for the purposes of capital gains tax or corporation tax, as the case may be, as an allowable loss arising in that chargeable period otherwise than on a material disposal.
- (7) In any case where a loss accrues to the chargeable person on a material disposal made to a person who is connected with him (within the meaning of section 63 of the Capital Gains Tax Act 1979)—
- (a) the loss shall be excluded from those referred to in paragraph (b) of subsection (3) above and, accordingly, shall not be aggregated under that subsection; and
- (b) except as provided by subsection (8) below, section 62 of that Act shall apply in relation to the loss as if, in subsection (3) of that section (losses on disposals to a connected person to be set only against gains on disposals made to the same person at a time when he is a connected person), any reference to a disposal were a reference to a disposal which is a material disposal; and
- (c) to the extent that the loss is set against a chargeable gain by virtue of paragraph (b) above, the gain shall be excluded from those referred to in paragraph (a) of subsection (3) above and, accordingly, shall not be aggregated under that subsection.
- (8) In any case where—
- (a) the losses accruing to the chargeable person in any chargeable period on material disposals to a connected person exceed the gains accruing to him in that chargeable period on material disposals made to that person at a time when they are connected persons, and
- (b) before the expiry of the period of two years beginning at the end of the chargeable period concerned, the chargeable person makes a claim under this subsection,
the whole, or such part as is specified in the claim, of the excess referred to in paragraph (a) above shall be treated for the purposes of section 62 of the Capital Gains Tax Act 1979 as if it were a loss accruing on a disposal in that chargeable period, being a disposal which is not a material disposal and which is made by the chargeable person to the connected person referred to in paragraph (a) above.
- (9) Where a claim is made under subsection (6) or subsection (8) above, all such adjustments shall be made, whether by way of discharge or repayment of tax (including capital gains tax) or otherwise, as may be required in consequence of the operation of that subsection.
- (10) In subsection (5) above " ring fence income " means income arising from oil extraction activities or oil rights, within the meaning of Part II of the Oil Taxation Act 1975.
#### Replacement of business assets used in connection with oil fields
##### 80
- (1) If the consideration which a person obtains on a material disposal is applied, in whole or in part, as mentioned in subsection (1) of section 115 or section 116 of the Capital Gains Tax Act 1979 (replacement of business assets), that section shall not apply unless the new assets are taken into use, and used only, for the purposes of the ring fence trade.
- (2) Subsection (1) above has effect notwithstanding subsection (7) of the said section 115 (which treats two or more trades as a single trade for certain purposes).
- (3) Where the said section 115 or the said section 116 applies in relation to any of the consideration on a material disposal, the asset which constitutes the new assets for the purposes of that section shall be conclusively presumed to be a depreciating asset, and section 117 of the Capital Gains Tax Act 1979 (special rules for depreciating assets) shall have effect accordingly, except that—
- (a) the reference in subsection (2)(b) of that section to a trade carried on by the claimant shall be construed as a reference solely to his ring fence trade ; and
- (b) subsections (3) to (6) of that section shall be omitted.
- (4) In any case where sections 115 to 117 of the Capital Gains Tax Act 1979 have effect in accordance with the preceding provisions of this section, the operation of section 276 of the Taxes Act (replacement of business assets by members of a group) shall be modified as follows:—
- (a) only those members of a group which actually carry on a ring fence trade shall be treated for the purposes of those sections as carrying on a single trade which is a ring fence trade ; and
- (b) only those activities which, in relation to each individual member of the group, constitute its ring fence trade shall be treated as forming part of that single trade.
- (5) In this section—
- (a) " material disposal" has the meaning assigned to it by section 79 above ; and
- (b) " ring fence trade " means a trade consisting of either or both of the activities mentioned in paragraphs (a) and (b) of subsection (1) of section 13 of the Oil Taxation Act 1975.
#### Disposals by non-residents etc. of assets used in connection with exploration and exploitation activities
##### 81
- (1) Section 38 of the Finance Act 1973 (territorial extension of charge to income tax, capital gains tax and corporation tax) shall be amended in accordance with this section.
- (2) After subsection (3) there shall be inserted the following subsections:—
> (3A) Gains accruing on the disposal of—
> (a) exploration or exploitation assets which are situated in a designated area, or
> (b) unquoted shares deriving their value or the greater part of their value directly or indirectly from exploration or exploitation assets situated in the United Kingdom or a designated area or from such assets and exploration or exploitation rights taken together,
> shall be treated for the purposes of the Capital Gains Tax Act 1979 as gains accruing on the disposal of assets situated in the United Kingdom.
> (3B) For the purposes of this section, an asset disposed of is an exploration or exploitation asset if either—
> (a) it is not a mobile asset and it is being or has at some time within the period of two years ending at the date of the disposal been used in connection with exploration or exploitation activities carried on in the United Kingdom or a designated area; or
> (b) it is a mobile asset which, at some time within the period of two years ending at the date of the disposal, has been used in connection with exploration or exploitation activities so carried on and is dedicated to an oil field in which the person making the disposal, or a person connected with him within the meaning of section 533 of the Taxes Act, is or has been a participator ;
> and expressions used in paragraphs (a) and (b) above have the same meaning as if those paragraphs were included in Part I of the Oil Taxation Act 1975.
> (3C) In paragraph (b) of subsection (3A) above "unquoted shares" means shares other than those which are quoted on a recognised stock exchange (within the meaning of the Corporation Tax Acts); and references in subsections (4) and (5) below to exploration or exploitation assets include references to unquoted shares falling within that paragraph.
- (3) In subsection (4) (which, among other things, provides that certain gains are to be treated as gains accruing on the disposal of trade assets) after the words " such rights " there shall be inserted the words " or of exploration or exploitation assets ".
- (4) In subsection (5) (inter-company disposals) after the word " rights " there shall be inserted the words " or exploration or exploitation assets ".
- (5) This section has effect in relation to disposals on or after 13th March 1984.
### CHAPTER VI — Controlled Foreign Companies
#### Imputation of chargeable profits and creditable tax of controlled foreign companies
##### 82
- (1) If the Board have reason to believe that in any accounting period a company—
- (a) is resident outside the United Kingdom, and
- (b) is controlled by persons resident in the United Kingdom, and
- (c) is subject to a lower level of taxation in the territory in which it is resident,
and the Board so direct, the provisions of this Chapter shall apply in relation to that accounting period.
- (2) A company which falls within paragraphs (a) to (c) of subsection (1) above is in this Chapter referred to as a " controlled foreign company ".
- (3) Where, by virtue of a direction under subsection (1) above, the provisions of this Chapter apply in relation to an accounting period of a controlled foreign company, the chargeable profits of that company for that period and its creditable tax (if any) for that period shall each be apportioned in accordance with section 87 below among the persons (whether resident in the United Kingdom or not) who had an interest in that company at any time during that accounting period.
- (4) Where, on such an apportionment of a controlled foreign company's chargeable profits for an accounting period as is referred to in subsection (3) above, an amount of those profits is apportioned to a company resident in the United Kingdom then, subject to subsection (5) below,—
- (a) a sum equal to corporation tax at the appropriate rate on that apportioned amount of profits, less the portion of the controlled foreign company's creditable tax for that period (if any) which is apportioned to the resident company, shall be assessed on and recoverable from the resident company as if it were an amount of corporation tax chargeable on that company ; and
- (b) if, apart from this paragraph, section 478 of the Taxes Act would deem any sum forming part of the company's chargeable profits for that accounting period to be the income of an individual for the purposes of the Income Tax Acts, that section shall not apply to such portion of that sum as corresponds to the portion of those chargeable profits which is apportioned to companies which are resident in the United Kingdom and which, by virtue of paragraph (a) above, have a liability to tax in respect thereof;
and for the purposes of paragraph (a) above " the appropriate rate" means the rate of corporation tax applicable to profits of that accounting period of the resident company in which ends the accounting period of the controlled foreign company to which the direction under subsection (1) above relates or, if there is more than one such rate, the average rate over the whole of that accounting period of the resident company.
- (5) Tax shall not, by virtue of subsection (4) above, be assessed on and recoverable from a company resident in the United Kingdom unless, on the apportionment in question, the aggregate of—
- (a) the amount of the controlled foreign company's chargeable profits for the accounting period in question which is apportioned to the resident company, and
- (b) any amounts of those chargeable profits which are apportioned to persons who are connected or associated with the resident company,
is at least 10 per cent, of the total of those chargeable profits.
- (6) In relation to a company resident outside the United Kingdom—
- (a) any reference in this Chapter to its chargeable profits for an accounting period is a reference to the amount which, on the assumptions in Schedule 16 to this Act, would be the amount of the total profits of the company for that period on which, after allowing for any deductions available against those profits, corporation tax would be chargeable ; and
- (b) any reference in this Chapter to profits does not include a reference to chargeable gains but otherwise (except as provided by paragraph (a) above) has the same meaning as it has for the purposes of corporation tax.
#### Limitations on direction-making power
@@ -2400,42 +1722,6 @@
##### 92
- (1) This Chapter applies to a disposal by any person of an asset if—
- (a) the disposal occurs on or after 1st January 1984 and, at the time of the disposal, the asset constitutes a material interest in an offshore fund which is or has at any material time been a non-qualifying offshore fund; or
- (b) paragraph (a) above does not apply but the disposal occurs on or after 1st January 1985 and the conditions in subsection (7) below are fulfilled.
- (2) Subject to the following provisions of this section and section 93 below, there is a disposal of an asset for the purposes of this Chapter if there would be such a disposal for the purposes of the Capital Gains Tax Act 1979 (in this Chapter referred to as " the principal Act").
- (3) Notwithstanding anything in subsection (1)(b) of section 49 of the principal Act (general provisions applicable on death: no deemed disposal by the deceased) where a person dies on or after 1st January 1984 and the assets of which he was competent to dispose include an asset which is or has at any time been a material interest in a non-qualifying offshore fund, then, for the purposes of this Chapter, other than section 93 below,—
- (a) immediately before the acquisition referred to in subsection (1)(a) of that section, that interest shall be deemed to be disposed of by the deceased for such a consideration as is mentioned in that subsection; but
- (b) nothing in this subsection affects the determination, in accordance with subsection (1) above, of the question whether that deemed disposal is one to which this Chapter applies.
- (4) Subject to subsection (3) above, section 49 of the principal Act applies for the purposes of this Chapter as it applies for the purposes of that Act, and the reference in subsection (3) above to the assets of which a deceased person was competent to dispose shall be construed in accordance with subsection (10) of that section.
- (5) Notwithstanding anything in section 85 of the principal Act (exchange of securities for those in another company) in any case where—
- (a) the company which is company B for the purposes of subsection (1) of that section is or was at a material time a non-qualifying offshore fund and the company which is company A for those purposes is not such a fund, or
- (b) under section 86 of that Act (reconstruction or amalgamation involving issue of securities) persons are to be treated, in consequence of an arrangement, as exchanging shares, debentures or other interests in or of an entity which is or was at a material time a nonqualifying offshore fund for assets which do not constitute interests in such a fund,
then, unless the exchange or arrangement is effected before 1st January 1985 and the shares, debentures or interests which are acquired as a result of the exchange or arrangement are shares, debentures or interests in or of a company resident in the United Kingdom, subsection (3) of the said section 85 (which applies provisions of that Act treating transactions as not being disposals and equating original shares with a new holding in certain cases) shall not apply for the purposes of this Chapter.
- (6) In any case where, apart from subsection (5) above, section 85(3) of the principal Act would apply, the exchange concerned of shares, debentures or other interests in or of a non-qualifying offshore fund shall for the purposes of this Chapter constitute a disposal of interests in the offshore fund for a consideration equal to their market value at the time of the exchange.
- (7) The conditions referred to in subsection (1)(b) above are—
- (a) that at the time of the disposal the asset constitutes an interest in a company resident in the United Kingdom or in a unit trust scheme, as defined in section 26(1) of the Prevention of Fraud (Investments) Act 1958, the trustees of which are at that time resident in the United Kingdom; and
- (b) that at a material time after 31st December 1984 the company or unit trust scheme was a non-qualifying offshore fund and the asset constituted a material interest in that fund;
and for the purpose of determining whether the asset disposed of falls within paragraph (b) above, section 78 of the principal Act (equation of original shares and new holding) shall have effect as it has effect for the purposes of that Act.
- (8) For the purposes of this section, a material time, in relation to the disposal of an asset, is any time on or after 1st January 1984 or, if it is later, the earliest date on which any relevant consideration was given for the acquisition of the asset; and for this purpose " relevant consideration " means consideration which, assuming the application to the disposal of Chapter II of Part II of the principal Act, would fall to be taken into account in determining the amount of the gain or loss accruing on the disposal, whether that consideration was given by or on behalf of the person making the disposal or by or on behalf of a predecessor in title of his whose acquisition cost represents, directly or indirectly, the whole or any part of the acquisition cost of the person making the disposal.
#### Offshore fund operating equalisation arrangements
##### 93
@@ -2729,38 +2015,6 @@
#### Reduction of tax
##### 101
- (1) Section 91(1) of the Finance Act .1982 (indexation of rate bands) shall not apply to chargeable transfers made in the year beginning with 6th April 1984.
- (2) For the Tables in section 37(3) of the Finance Act 1975 there shall be substituted the Tables set out below.
| *Portion of value* | *Portion of value* | *Rate of tax* |
| --- | --- | --- |
| **Lower limit** | **Upper limit** | **Per cent.** |
| **£** | **£** | |
| 0 | 64,000 | Nil |
| 64,000 | 85,000 | 30 |
| 85,000 | 116,000 | 35 |
| 116,000 | 148,000 | 40 |
| 148,000 | 185,000 | 45 |
| 185,000 | 232,000 | 50 |
| 232,000 | 285,000 | 55 |
| 285,000 | — | 60 |
| *Portion of value* | *Portion of value* | *Rate of tax* |
| --- | --- | --- |
| **Lower limit** | **Upper limit** | **Per cent.** |
| **£** | **£** | |
| 0 | 64,000 | Nil |
| 64,000 | 85,000 | 15 |
| 85,000 | 116,000 | 17 1/2 |
| 116,000 | 148,000 | 20 |
| 148,000 | 185,000 | 22 1/2 |
| 185,000 | 232,000 | 25 |
| 232,000 | 285,000 | 27 1/2 |
| 285,000 | — | 30 |
- (3) Subsection (2) above applies to any chargeable transfer made on or after 13th March 1984.
#### Special discretionary trusts: excluded property
@@ -2862,7 +2116,7 @@
Schedule 21 to this Act (which contains amendments designed to facilitate, or otherwise desirable in connection with, the consolidation of the law relating to capital transfer tax) shall have effect.
## PART IV — Stamp Duty
## PART IV — STAMP DUTY
#### Reduction of duty on conveyances and transfers
@@ -2870,13 +2124,11 @@
- (1) In subsection (1) of section 55 of the Finance Act 1963 and subsection (1) of section 4 of the Finance Act (Northern Ireland) 1963 for paragraphs (a) to (e) there shall be substituted the following paragraphs:—
> (a) where the amount or value of the consideration is £30,000 or under and the instrument is certified, as described in section 34(4) of the Finance Act 1958, at £30,000, nil;
> (b) where paragraph (a) above does not apply and the amount or value of the consideration does not exceed £500, the rate of 50p for every £50 or part of £50 of the consideration ; and
> (a) where the amount or value of the consideration is £30,0001 or under and the instrument is certified, as described in section 34(4) of the Finance Act 1958, at £30,000, nil;
> (b) where paragraph (a) above does not apply and the amount or value of the consideration does not exceed £500, the rate of 50p for every £50 or part of £50 of the consideration; and
> (c) where paragraph (a) above does not apply and the amount or value of the consideration exceeds £500, the rate of £1 for every £100 or part of £100 of the consideration
;
and in subsection (2) of each of those sections for the words from " as if " onwards there shall be substituted the words " as if paragraph (a) and, in paragraphs (b) and (c), the words "; paragraph (a) above does not apply and " were omitted ".
; and in subsection (2) of each of those sections for the words from “as if" onwards there shall be substituted the words “as if paragraph (a) and, in paragraphs (b) and (c), the words “paragraph (a) above does not apply and" were omitted".
- (2) Part III of Schedule 11 to the Finance Act 1974 (saving for certain transfers of stock or marketable securities) shall cease to have effect.
@@ -2888,7 +2140,7 @@
and, for the purposes of section 14(4) of the Stamp Act 1891 (instruments not to be given in evidence etc. unless stamped in accordance with the law in force at the time of first execution), the law in force at the time of execution of an instrument falling within paragraph (b) above shall be deemed to be that as varied in accordance with subsections (1) and (2) above.
- (4) In the case of an instrument giving effect to a stock exchange transaction, as denned in section 4 of the Stock Transfer Act 1963, subsections (1) to (3) above do not apply unless the transaction takes place on or after 12th March 1984 and is one in respect of which settlement is due on or after 13th March 1984.
- (4) In the case of an instrument giving effect to a stock exchange transaction, as defined in section 4 of the Stock Exchange Transfer Act 1963, subsections (1) to (3) above do not apply unless the transaction takes place on or after 12 March 1984 and is one in respect of which settlement is due on or after 13th March 1984.
- (5) This section shall be deemed to have come into force on 20th March 1984.
@@ -2896,7 +2148,7 @@
##### 110
- (1) Section 107 of the Finance Act 1981 (sales of houses at discount by local authorities etc.) shall be amended in accordance with the following provisions of this section.
- (1) Section 107 of the Finance Act 1981 (sales of houses at discount by local authorities etc.) shall be amended in accordance with the following provision of this section.
- (2) At the end of subsection (3) of that section (which lists the bodies a conveyance or transfer by which is affected by the section) there shall be added the following paragraph:—
@@ -2926,7 +2178,7 @@
##### 111
- (1) In section 75 of the Stamp Act 1891 (agreements for leases for terms not exceeding 35 years to be stamped as if they were leases) in subsection (1) the words "not exceeding thirty-five years " shall be omitted and for subsection (2) (5 pence stamp on lease in conformity with duly stamped agreement) there shall be substituted the following subsection:—
- (1) In section 75 of the Stamp Act 1891 (agreements for leases for terms not exceeding 35 years to be stamped as if they were leases) in subsection (1) the words “not exceeding thirty-five years" shall be omitted and for subsection (2) (5 pence stamp on lease in conformity with duly stamped agreement) there shall be substituted the following subsection:—
> (2) Where duty has been duly paid on an agreement for a lease or tack and, subsequent to that agreement, a lease or tack is granted which either—
> (a) is in conformity with the agreement, or
@@ -2943,7 +2195,7 @@
- (3) For the purposes of subsection (2) above, an interest conveyed or transferred or, as the case may be, a lease or tack granted is not to be regarded as subject to an agreement for a lease or tack if that agreement is directly enforceable against another interest in the land in relation to which the interest conveyed or transferred or, as the case may be, the lease or tack granted is a superior interest.
- (4) In section 15 of the Stamp Act 1891 (stamping of instruments after execution) in the Table following paragraph (d) of subsection (2) (instruments as to which certain special provisions apply), after the entry beginning " lease or tack ", there shall be inserted:—
- (4) In section 15 of the Stamp Act 1891 (stamping of instruments after execution) in the Table following paragraph (d) of subsection (2) (instruments as to which certain special provisions apply), after the entry beginning “lease or tack", there shall be inserted:—
| Agreement for lease or tack chargeable under section 75. | The person contracting for the lease or tack to be granted to him or another. |
| --- | --- |
@@ -2954,13 +2206,13 @@
##### 112
- (1) In subsection (4) of section 58 of the Stamp Act 1891 (in case of a sub-sale to a single purchaser, duty chargeable only on consideration moving from the sub-purchaser) after the words " conveyed immediately to the sub-purchaser " there shall be inserted the words " then, except where—
- (1) In subsection (4) of section 58 of the Stamp Act 1891 (in case of a sub-sale to a single purchaser, duty chargeable only on consideration moving from the sub-purchaser) after the words “conveyed immediately to the sub-purchaser" there shall be inserted the words “then, except where—
- (a) the chargeable consideration moving from the sub-purchaser is less than the value of the property immediately before the contract of sale to him, and
- (b) the conveyance is not one to which section 107 of the Finance Act 1981 (sales of houses at discount by local authorities etc.) applies ".
- (2) In subsection (5) of section 58 of the Stamp Act 1891 (in case of a sub-sale in parts or parcels to different sub-purchasers, each conveyance chargeable with duty only on consideration moving from the sub-purchaser) after the words " to different persons in parts or parcels " there shall be inserted the words " then, except where the aggregate of the chargeable consideration for the sale of all such parts or parcels is less than the value of the whole of the property immediately before the contract for their sale or, as the case may be, the first contract for the sale of any of them ".
- (b) the conveyance is not one to which section 107 of the Finance Act 1981 (sales of houses at discount by local authorities etc.) applies".
- (2) In subsection (5) of section 58 of the Stamp Act 1891 (in case of a sub-sale in parts or parcels to different sub-purchasers, each conveyance chargeable with duty only on consideration moving from the sub-purchaser) after the words “to different persons in parts or parcels" there shall be inserted the words “ then, except where the aggregate of the chargeable consideration for the sale of all such parts or parcels is less than the value of the whole of the property immediately before the contract for their sale or, as the case may be, the first contract for the sale of any of them ”.
- (3) At the end of the said section 58 there shall be inserted the following subsection:—
@@ -2968,21 +2220,21 @@
- (4) This section applies where the contract for the sub-sale or, as the case may be, the first contract for sub-sale of a part or parcel is entered into on or after 20th March 1984, and shall be deemed to have come into force on that date.
## PART V — Oil Taxation
## PART V — OIL TAXATION
#### Restriction on PRT reliefs
##### 113
- (1) Subject to subsection (3) below, in determining whether any abortive exploration expenditure or exploration and appraisal expenditure is allowable in the case of a participator in an oil field under section 5 or section 5A of the principal Act, no account shall be taken of any expenditure incurred before his qualifying date.
- (1) Subject to subsection (3) below, in determining whether any . . . expenditure is allowable in the case of a participator in an oil field under section 5 or section 5A or section 5B of the principal Act, no account shall be taken of any expenditure incurred before his qualifying date.
- (2) Subject to subsection (3) below, in determining whether any unrelievable field losses are allowable in the case of a participator in an oil field under section 6 of that Act, no account shall be taken of any allowable loss which, in the case of any other oil field from which the winning of oil has permanently ceased, has accrued as mentioned in subsection (1) of that section unless the date on which the winning of oil from that other field permanently ceased fell on or after his qualifying date.
- (3) Subsections (1) and (2) above do not apply in the case of a participator in an oil field if his qualifying date falls before 14th September 1983 or before the end of the first chargeable period in relation to the field.
- (4) In this section " qualifying date ", in relation to a participator in an oil field, means whichever of the following dates is applicable in his case or (if there is more than one) the earliest of them—
- (a) the date on which the participator first qualified in respect of any licensed area, being an area which is wholly or partly included in the field ;
- (4) In this section “*qualifying date*”, in relation to a participator in an oil field, means whichever of the following dates is applicable in his case or (if there is more than one) the earliest of them—
- (a) the date on which the participator first qualified in respect of any licensed area, being an area which is wholly or partly included in the field;
- (b) if the participator is a company, the date on which another company first satisfied both of the following conditions, that is to say—
@@ -2998,21 +2250,19 @@
- (b) he enjoys rights under an agreement, being an agreement which has been approved by the Board and certified by the Secretary of State to confer on him rights which are the same as, or similar to, those conferred by a licence.
- (6) Where (apart from this section) expenditure would be allowable under section 5 or section 5A of the principal Act in the case of a participator in an oil field (in this subsection referred to as " the new participator ") by virtue only of paragraph 16 or paragraph 16A of Schedule 17 to the Finance Act 1980 (transfers of interests in oil fields) then, for the purpose of determining whether the expenditure is allowable in his case in accordance with this section, the date which was the qualifying date in relation to the old participator (within the meaning of that Schedule) is an applicable date to be taken into account for the purposes of subsection (4) above in the case of the new participator.
- (6) Where (apart from this section) expenditure would be allowable under section 5 or section 5A or section 5B of the principal Act in the case of a participator in an oil field (in this subsection referred to as “the new participator") by virtue only of paragraphs 16 to 16B of Schedule 17 to the Finance Act 1980 (transfers of interests in oil fields) then, for the purpose of determining whether the expenditure is allowable in his case in accordance with this section, the date which was the qualifying date in relation to the old participator (within the meaning of that Schedule) is an applicable date to be taken into account for the purposes of subsection (4) above in the case of the new participator.
- (7) For the purposes of subsection (2) above the date on which the winning of oil from an oil field has permanently ceased is the date stated in a decision (whether of the Board or on appeal from the Board) under Schedule 8 to the principal Act to be that date.
- (8) For the purposes of this section, one company is connected with another if—
- (a) one is a 51 per cent, subsidiary of the other and the other is not a 51 per cent, subsidiary of any company; or
- (b) each of them is a 51 per cent, subsidiary of a third company which is not itself a 51 per cent, subsidiary of any company;
and section 532 of the Taxes Act (subsidiaries) applies for the purposes of this subsection.
- (a) one is a 51 per cent. subsidiary of the other and the other is not a 51 per cent. subsidiary of any company; or
- (b) each of them is a 51 per cent. subsidiary of a third company which is not itself a 51 per cent. subsidiary of any company; and section 836 of the Taxes Act 1988 (subsidiaries) applies for the purposes of this subsection.
- (9) In this section—
- (a) " company " means any body corporate ; and
- (a) “*company*” means any body corporate; and
- (b) any reference to the winning of oil from an oil field permanently ceasing includes a reference to the permanent cessation of operations for the winning of oil from the field.
@@ -3044,7 +2294,7 @@
then at that latest date, one tonne of oil shall be deemed to be delivered as mentioned in paragraph (b) above and so much of the advance payment as has not, under subsection (3) above, been attributed to oil actually delivered shall be attributed to that one tonne.
- (5) Where, under a contract for the sale of oil won from an oil field, the consideration includes any sums (in this section referred to as " capacity payments ")—
- (5) Where, under a contract for the sale of oil won from an oil field, the consideration includes any sums (in this section referred to as “capacity payments")—
- (a) which are payable by the buyer at specified times or in respect of specified periods, and
@@ -3062,41 +2312,39 @@
##### 115
- (1) The Board may, by notice in writing given to a company which is or has been a participator in an oil field, require that company to give to the Board, within such time (not being less than thirty days) as may be specified in the notice,
such particulars (which may include details of relevant documents) as may be so specified of any related transaction which appears to the Board to be relevant for the purpose of—
- (a) determining whether a disposal of any oil is a sale at arm's length, or
- (1) The Board may, by notice in writing given to a company which is or has been a participator in an oil field, require that company to give to the Board, within such time (not being less than thirty days) as may be specified in the notice, such particulars (which may include details of relevant documents) as may be so specified of any related transaction which appears to the Board to be relevant for the purpose of—
- (a) determining whether a disposal of any oil is a sale at arm’s length, or
- (b) ascertaining the market value of any oil.
- (2) For the purposes of a notice under subsection (1) above a transaction is a related transaction if, but only if, it is one to which the company to whom the notice is given or a company associated with that company was a party ; and for the purposes of this subsection two companies are associated with one another if—
- (2) For the purposes of a notice under subsection (1) above a transaction is a related transaction if, but only if, it is one to which the company to whom the notice is given or a company associated with that company was a party; and for the purposes of this subsection two companies are associated with one another if—
- (a) one is under the control of the other; or
- (b) both are under the control of the same person or persons;
and in this subsection " control" has the meaning given by section 534 of the Taxes Act.
- (3) In any case where a company (in this subsection and subsection (4) below referred to as " the participator company ") is or has been a participator in an oil field and—
and in this subsection “*control*” has the meaning given by section 840 of the Taxes Act 1988.
- (3) In any case where a company (in this subsection and subsection (4) below referred to as “the participator company") is or has been a participator in an oil field and—
- (a) the participator company is a 51 per cent. subsidiary of another company, or
- (b) another company is a 51 per cent. subsidiary of the participator company, or
- (c) the participator company and another company are both 51 per cent, subsidiaries of a third company,
the Board may, by notice in writing given to any company referred to in paragraphs (a) to (c) above which is resident in the United Kingdom, require it to make available for inspection any relevant books, accounts or other documents or records whatsoever of the company itself or, subject to subsection (5) below, of any other company which is its 51 per cent, subsidiary.
- (4) In subsection (3) above " relevant" means relating to any transaction which is relevant for the purpose of—
- (a) determining whether a disposal of any oil by the participator company is a sale at arm's length ; or
- (c) the participator company and another company are both 51 per cent. subsidiaries of a third company,
the Board may, by notice in writing given to any company referred to in paragraphs (a) to (c) above which is resident in the United Kingdom, require it to make available for inspection any relevant books, accounts or other documents or records whatsoever of the company itself or, subject to subsection (5) below, of any other company which is its 51 per cent. subsidiary.
- (4) In subsection (3) above “*relevant*” means relating to any transaction which is relevant for the purpose of—
- (a) determining whether a disposal of any oil by the participator company is a sale at arm’s length; or
- (b) ascertaining the market value of oil won by the participator company.
- (5) In any case where—
- (a) under subsection (3) above a company is by notice required to make available for inspection any books, accounts, documents or records of one of its 51 per cent, subsidiaries which is resident outside the United Kingdom, and
- (a) under subsection (3) above a company is by notice required to make available for inspection any books, accounts, documents or records of one of its 51 per cent. subsidiaries which is resident outside the United Kingdom, and
- (b) it appears to the Board, on the application of the company, that the circumstances are such that the requirement ought not to have effect,
@@ -3106,9 +2354,9 @@
- (7) In this section—
- " company " means any body corporate ; and
- "51 per cent, subsidiary " shall be construed in accordance with section 532 of the Taxes Act (subsidiaries).
- “*company*” means any body corporate; and
- “51 per cent. subsidiary" shall be construed in accordance with section 838 of the Taxes Act 1988 (subsidiaries).
#### Offences relating to section 115
@@ -3116,7 +2364,7 @@
- (1) Where a company has been required by notice under subsection (1) or subsection (3) of section 115 above to give any particulars or, as the case may be, to make available for inspection any books, accounts, documents or records and fails to comply with the notice, the company shall be liable, subject to subsection (3) below—
- (a) to a penalty not exceeding £500 ; and
- (a) to a penalty not exceeding £500; and
- (b) if the failure continues after it has been declared by the court or the Commissioners before whom proceedings for the penalty have been commenced, to a further penalty not exceeding £100 for each day on which the failure so continues.
@@ -3124,9 +2372,9 @@
- (3) A company shall not be liable to any penalty incurred under subsection (1) above for failure to comply with a notice if the failure is remedied before proceedings for the recovery of the penalty are commenced.
- (4) In this section " company " has the same meaning as in section 115 above.
## PART VI — Miscellaneous and Supplementary
- (4) In this section “*company*” has the same meaning as in section 115 above.
## PART VI — MISCELLANEOUS AND SUPPLEMENTARY
### National insurance surcharge
@@ -3136,7 +2384,7 @@
The surcharge payable under the National Insurance Surcharge Act 1976 is hereby abolished—
- (a) with respect to earnings paid on or after 6th April 1985, in the case of secondary Class 1 contributions payable by any of the bodies mentioned in section 143(4) of the Finance Act 1982 ; and
- (a) with respect to earnings paid on or after 6th April 1985, in the case of secondary Class 1 contributions payable by any of the bodies mentioned in section 143(4) of the Finance Act 1982; and
- (b) with respect to earnings paid on or after 1st October 1984, in any other case.
@@ -3145,12 +2393,6 @@
#### Increase of exemption from õ0,000 to ÷5,000
##### 118
With respect to financial years ending after 31st March 1984, in the following provisions of the Development Land Tax Act 1976 (which provide for, or relate to, the exemption for the first £50,000 of realised development value) for " £50,000 ", in each place where it occurs, there shall be substituted " £75,000 " —
- (a) section 12 (the exemption itself); and
- (b) in Part II of Schedule 8 (notification) paragraphs 35(1) and 38(3).
#### Deferred liability
@@ -3267,20 +2509,20 @@
> (a) tax is assessed on any person not resident in the United Kingdom as mentioned in paragraph 4(1)(a) or (b) but more than one licence under the Petroleum (Production) Act 1934 is the basis for the assessment; or
> (b) tax assessed on any such person includes, but is not limited to, tax assessed on him as so mentioned (whether by reference to one or to more than one such licence);
> but in any such case the amount the holder of any licence in question may be required to pay by a notice under that paragraph shall be the amount of the tax remaining unpaid under the assessment which is attributable to the profits or gains in respect of which that licence was the basis for the assessment, together with a corresponding proportion of any interest due as mentioned in paragraph 4(1).
> (2) For the purposes of sub-paragraph (1) above the amount of the tax remaining unpaid under the assessment which is attributable to the profits or gains in respect of which any licence in question was the basis for the assessment is such part of the total amount of that tax as bears to that total amount the same proportion as the proportion borne by the amount of the profits or gains in respect of which that licence was the basis for the assessment to the total amount of the profits or gains in respect of which the assessment was made.
- (3) In paragraph 6 of that Schedule, after the word " apply " there shall be inserted the words " in relation to the holder of any licence ".
- (4) In paragraph 7 of that Schedule, at the end there shall be added the words " or, if the certificate is cancelled under paragraph 8 below, to any such tax which becomes due after the cancellation of the certificate in respect of profits or gains arising while the certificate is in force (referred to below in this Schedule as pre-cancellation profits or gains) ".
> (2) For the purposes of sub-paragrapah (1) above the amount of the tax remaining unpaid under the assessment which is attributable to the profits or gains in respect of which any licence in question was the basis for the assessment is such part of the total amount of that tax as bears to that total amount the same proportion as the proportion borne by the amount of the profits or gains in respect of which that licence was the basis for the assessment to the total amount of the profits or gains in respect of which the assessment was made.
- (3) In paragraph 6 of that Schedule, after the word “apply" there shall be inserted the words “ in relation to the holder of any licence ”.
- (4) In paragraph 7 of that Schedule, at the end there shall be added the words “ or, if the certificate is cancelled under paragraph 8 below, to any such tax which becomes due after the cancellation of the certificate in respect of profits or gains arising while the certificate is in force (referred to below in this Schedule as pre-cancellation profits or gains) ”.
- (5) After paragraph 7 of that Schedule, there shall be inserted the following paragraph—
> (7A)
> (1) Paragraph 7 above is subject to the following provisions of this paragraph in any case where—
> (a) after the cancellation of a certificate issued to the holder of a licence under that paragraph tax is assessed as mentioned in paragraph 4(1)(a) or (b) above on the person who applied for the certificate ; and
> (a) after the cancellation of a certificate issued to the holder of a licence under that paragraph tax is assessed as mentioned in paragraph 4(1)(a) or (b) above on the person who applied for the certificate; and
> (b) the relevant profits or gains include (but are not limited to) pre-cancellation profits or gains.
> (2) In this paragraph " the relevant profits or gains " means—
> (a) in a case where the amount of the tax remaining unpaid under the assessment which, but for paragraph 7 above, the holder of the licence could be required to pay by a notice under paragraph 4 above (referred to below in this paragraph as the amount otherwise applicable in his case) is the whole of the amount remaining unpaid, all the profits or gains in respect of which the assessment was made; or
> (2) In this paragraph “the relevant profits or gains" means—
> (a) in a case where the amount of the tax remaining unpaid under the assessment which, but for paragraph 7 above, the holder of the licence could be required to pay by a notice under paragraph 4 above (referred to below in this paragraph as the amount otherwise applicable in his case) is the whole of the amount remainig unpaid, all the profits or gains in respect of which the assessment was made; or
> (b) in a case where the amount otherwise applicable in his case falls under paragraph 4A above to be determined by reference to profits or gains in respect of which the licence was the basis for the assessment, the profits or gains in question.
> (3) In any case to which this paragraph applies, the amount the holder of the licence may be required to pay by a notice under paragraph 4 shall be the amount otherwise applicable in his case reduced by the amount of the tax remaining unpaid under the assessment which is attributable to the pre-cancellation profits or gains, together with a corresponding proportion of any interest due as mentioned in paragraph 4(1).
> (4) For the purposes of sub-paragraph (3) above the amount of the tax remaining unpaid under the assessment which is attributable to the pre-cancellation profits or gains is such part of the amount otherwise applicable in the case of the holder of the licence as bears to the whole of the amount otherwise so applicable the same proportion as the proportion borne by the amount of the pre-cancellation profits or gains to the total amount of the relevant profits or gains.
@@ -3290,7 +2532,7 @@
> (8A)
> (1) For the purposes of paragraphs 4A and 7A above and this paragraph, profits or gains in respect of which an assessment is made as mentioned in paragraph 4(1)(a) or (b) above are profits or gains in respect of which any licence in question was the basis for the assessment if those profits or gains fall within paragraph 4(1)(a) or (b) by reference to that licence.
> (2) In determining—
> (a) for the purposes of paragraph 4A(2) or 7A(4) above, the amount of the profits or gains in respect of which any licence was the basis for an assessment; or
> (a) for the purposes of paragraph 4A(2) or 7A(4) above, the amount of the profits or gains in erespect of which any licence was the basis for an assessment; or
> (b) for the purposes of paragraph 7A(4) above, the amount of any pre-cancellation profits or gains;
> the Board shall compute that amount as if for the purposes of making a separate assessment in respect of those profits or gains on the person on whom the assessment was made, making all such allocations and apportionments of receipts, expenses, allowances and deductions taken into account or made for the purposes of the actual assessment as appear to the Board to be just and reasonable in the circumstances.
> (3) A notice under paragraph 4 above as it applies by virtue of paragraph 4A or 7A above shall give particulars of the manner in which the amount required to be paid was determined.
@@ -3298,7 +2540,7 @@
- (7) In section 3(4) of the Oil Taxation Act 1975 (items excluded from allowable expenditure under that section for any oil field)—
- (a) the word " or" at the end of paragraph (d) shall be omitted; and
- (a) the word “or" at the end of paragraph (d) shall be omitted; and
- (b) after paragraph (e) there shall be inserted the following words—
@@ -3311,20 +2553,20 @@
##### 125
- (1) For section 4 of the National Loans Act 1968: (power to make local loans) there shall be substituted the following section—
- (1) For section 4 of the National Loans Act 1968 (power to make local loans) there shall be substituted the following section—
> (4)
> (1) The aggregate of—
> (a) any commitments of the Loan Commissioners outstanding in respect of undertakings entered into by them to grant local loans; and
> (b) any amount outstanding in respect of the principal of any local loans ;
> shall not at any time exceed £28,000 million or such other (1ower or higher) sum, not exceeding £35,000 million, as the Treasury may from time to time specify by order made by statutory instrument
> (b) any amount outstanding in respect of the principal of any local loans;
> shall not at any time exceed £28,000 million or such other (lower or higher) sum, not exceeding £35,000 million, as the Treasury may from time to time specify by order made by statutory instrument.
> (2) No order shall be made under this section unless a draft of it has been laid before and approved by a resolution of the Commons House of Parliament.
- (2) In section 3 of that Act—
- (a) in subsection (5), the words from " and" to " future Act" shall be omitted ; and
- (b) in subsection (11), for the words from the beginning to "those " there shall be substituted the words " Subject to the limit in this Act, the Loan Commissioners may make loans of the descriptions ".
- (a) in subsection (5), the words from “and" to “future Act" shall be omitted; and
- (b) in subsection (11), for the words from the beginning to “those" there shall be substituted the words “ Subject to the limit in this Act, the Loan Commissioners may make loans of the descriptions ”.
#### Tax exemptions in relation to designated international organisations
@@ -3332,25 +2574,25 @@
- (1) Where—
- (a) the United Kingdom or any of the Communities is a member of an international organisation ; and
- (b) the agreement under which it became a member provides for exemption from tax, in relation to the organisation, of the kind for which provision is made by this section;
the Treasury may, by order made by statutory instrument, designate that organisation for the purposes of this section.
- (a) the United Kingdom or any of the Communities is a member of an international organisation; and
- (b) the agreement under which it became a member provides for exemption from tax, in relation to the organisation, of the kind for which provision is made by this section; the Treasury may, by order made by statutory instrument, designate that organisation for the purposes of this section.
- (2) Where an organisation has been so designated, the provisions mentioned in subsection (3) below shall, with the exception of any which may be excluded by the designation order, apply in relation to that organisation.
- (3) The provisions are—
- (a) a person not resident in the United Kingdom shall not be liable to income tax in respect of income from any security issued by the organisation if he would not be liable but for the fact that—
- (i) the security or income is issued, made payable or paid in the United Kingdom or in sterling ; or
- (ii) the organisation maintains an office or other place of business in the United Kingdom ;
- (b) any security issued by the organisation shall be taken, for the purposes of capital transfer tax and capital gains tax, to be situated outside the United Kingdom; and
- (c) no stamp duty shall be chargeable under the heading " Bearer Instrument" in Schedule 1 to the Stamp Act 1891 on the issue of any instrument by the organisation or on the transfer of the stock constituted by, or transferable by means of, any instrument issued by the organisation.
- (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (b) any security issued by the organisation shall be taken, for the purposes of capital transfer tax . . ., to be situated outside the United Kingdom; and
- (c) no stamp duty shall be chargeable under the heading “Bearer Instrument” in Schedule 1 to the Stamp Act 1891 on the issue of any instrument by the organisation or on the transfer of the stock constituted by, or transferable by means of, any instrument issued by the organisation.
- (d) no stamp duty reserve tax shall be chargeable under section 93 (depositary receipts) or 96 (clearance services) of the Finance Act 1986 in respect of the issue of securities by the organisation.
- (4) The Treasury may, by order made by statutory instrument, designate any of the Communities or the European Investment Bank for the purposes of this section, and references in subsections (2) and (3) above to an organisation designated for the purposes of this section include references to a body so designated by virtue of this subsection.
- (5) Subsection (3) above, as it applies by virtue of subsection (4) above, shall be read as if the words “under the heading” “Bearer Instrument” in Schedule 1 to the Stamp Act 1891 were omitted
#### Special and General Commissioners
@@ -3366,11 +2608,11 @@
- (1) This Act may be cited as the Finance Act 1984.
- (2) In this Act "the Taxes Act" means the Income and Corporation Taxes Act 1970.
- (2) In this Act “*the Taxes Act*” means the Income and Corporation Taxes Act 1970 and “*the Taxes Act 1988*” means the Income and Corporation Taxes Act 1988.
- (3) Part II 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) Part III of this Act shall be construed as one with Part III of the Finance Act 1975.
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) Part V of this Act shall be construed as one with Part I of the Oil Taxation Act 1975 and references in Part V of this Act to the principal Act are references to that Act.
@@ -3388,7 +2630,7 @@
- (3) Notwithstanding anything in sub-paragraph (1) above, wine or made-wine which is for the time being in a closed container shall not be regarded as sparkling for the purposes of the rates of duty set out above, if—
- (a) the container does not have a mushroom-shaped stopper (whether solid or hollow) held in place by a tie or fastening ; and
- (a) the container does not have a mushroom-shaped stopper (whether solid or hollow) held in place by a tie or fastening; and
- (b) the pressure in the container, measured at a temperature of 20° C, is less than 3 bars in excess of atmospheric pressure.
@@ -3396,24 +2638,17 @@
For the purposes of this Act, wine or made-wine shall be regarded as having been rendered sparkling if—
- (a) as a result of aeration, fermentation or any other process, it either falls within paragraph 1(1) above or takes on such characteristics as are referred to in paragraph 1(2) above; or
- (b) being sparkling wine or made-wine which, by virtue only of paragraph 1(3) above, was not chargeable to duty as sparkling wine or made-wine, it is transferred into a closed container which has a mushroom-shaped stopper (whether solid or hollow) held in place by a tie or fastening.
- (a) as a result of aeration, fermentation or any other process, it either falls within paragarph 1(1) above or takes on such characteristics as are referred to in paragraph 1(2) above; or
- (b) being sparkling wine or made-wine which, by virtue only of 1(3) above, was not chargeable to duty as sparkling wine or made-wine, it is transferred into a closed container which has a mushroom-shaped stopper (whether solid or hollow) held in place by a tie or fastening.
## SCHEDULE 2
## PART I — Provisions substituted in Part II of Schedules 1 to 5 to the Vehicles (Excise) Act 1971 and the Vehicles (Excise) Act (Northern Ireland) 1972
## Part I
##### 1
The following are the provisions substituted in the Act of 1971 and the Act of 1972 for Part II of Schedule 1—
| *Description of vehicle* | *Rate of duty* |
| --- | --- |
| | **£** |
| 1. Bicycles and tricycles of which the cylinder capacity of the engine does not exceed 150 cubic centimetres ...... | 9.00 |
| 2. Bicycles of which the cylinder capacity of the engine exceeds 150 cubic centimetres but does not exceed 250 cubic centimetres; tricycles (other than those in the foregoing paragraph) and vehicles (other than mowing machines) with more than three wheels, being tricycles and vehicles neither constructed nor adapted for use nor used for the carriage of a driver or passenger............ | 18.00 |
| 3. Bicycles and tricycles not in the foregoing paragraphs | 36.00 |
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 2
@@ -3659,25 +2894,23 @@
| 1. Any vehicle first registered under the Roads Act 1920 before 1st January 1947, or which, if its first registration for taxation purposes had been effected in Northern Ireland, would have been so first registered under the Act as in force in Northern Ireland | 60.00 |
| 2. Other vehicles | 90.00 |
## PART II — Amendment of Part I of Schedule 4 to the Vehicles (Excise) Act 1971 and the Vehicles (Excise) Act (Northern Ireland) 1972
### AMENDMENTS MADE IN BOTH ACTS
## Part II — Amendment of Part I of Schedule 4 to the Vehicles (Excise) Act 1971 and the Vehicles (Excise) Act (Northern Ireland) 1972
### Amendments made in both Acts
##### 6
- (1) Part I of Schedule 4 to the Act of 1971 and the Act of 1972 (annual rates of duty on goods vehicles: general provisions) shall be amended as follows.
- (2) In paragraph 1(1), for " £150" there shall be substituted " £130 ".
- (3) In paragraph 2, for " £320 " there shall be substituted " £290 ".
- (4) In paragraph 6(1), for " £63 " there shall be substituted " £67 ".
- (5) In paragraph 7, for " £85 " there shall be substituted " £90 ".
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
## SCHEDULE 3
## PART I — Special Licences and Staggered Starting Dates for Whole-Year Licences in Respect of Premises
## Part I — Special Licences and Staggered Starting Dates for Whole-Year Licences in Respect of Premises
##### 1
@@ -3689,21 +2922,21 @@
> (21)
> (1) Except in the cases specified in Part I of Schedule 4 to this Act, no gaming machine (other than a two-penny machine) shall be provided for gaming on any premises situated in Great Britain unless there is for the time being in force—
> (a) a licence granted under this Part of this Act with respect to the premises ; or
> (a) a licence granted under this Part of this Act with respect to the premises; or
> (b) a licence so granted with respect to the machine.
> (2) A licence of either kind granted under this Part of this Act shall be known as a gaming machine licence; and in this Part " ordinary licence " means a licence falling within subsection (1)(a) above and " special licence" means one falling within subsection (1)(b).
> (3) A special licence may be a whole-year or half-year licence and an ordinary licence may be a whole-year, half-year or quarter-year licence ; and the period for which a gaming machine licence is to be granted shall be determined by reference to the following Table.
| Type of licence | Period for which licence is to be granted |
> (2) A licence of either kind granted under this Part of this Act shall be known as a gaming machine licence; and in this Part “*ordinary licence*” means a licence falling within subsection (1)(a) above and “*special licence*” means one falling within subsection (1)(b).
> (3) A special licence may be a whole-year or half-year licence and an ordinary licence may be a whole-year, half-year or quarter-year licence; and the period for which a gaming machine licence is to be granted shall be determined by reference to the following Table.
| *Type of licence* | *Period for which licence is to be granted* |
| --- | --- |
| 1. Whole-year special licence ... | Twelve months beginning with 1st October. |
| 2. Half-year special licence ... | Six months beginning with 1st April or 1st October. |
| 3. Whole-year ordinary licence in respect of premises situated in— | |
| 1. Whole-year special licence | Twelve months beginning with 1st October. |
| 2. Half-year special licence | Six months beginning with 1st April or 1st October. |
| 3. Whole-year ordinary licence in respect of premises situation in— | |
| (a) The first region | Twelve months beginning with 1st December. |
| (b) The second region | Twelve months beginning with 1st February. |
| (c) The third region | Twelve months beginning with 1st June. |
| (d) The fourth region | Twelve months beginning with 1st August. |
| 4. Half-year ordinary licence ... | Six months beginning with 1st April or 1st October. |
| 4. Half-year ordinary licence | Six months beginning with 1st April or 1st October. |
| 5. Quarter-year ordinary licence | Three months beginning with 1st January, 1st April, 1st July or 1st October. |
> In this Table any reference to a named region is a reference to that part of Great Britain which has been designated by the Commissioners, for the purposes of this Act, as that named region.
@@ -3713,31 +2946,15 @@
##### 3
After section 21 there shall be inserted the following section—
> (21A)
> (1) No special licence shall authorise more than one machine.
> (2) An application for a special licence shall only be granted if—
> (a) the Commissioners are satisfied that at least nine other special licences will be granted to the applicant, for the period to which that application relates, on applications made together with that application ; or
> (b) at least ten special licences, granted for that period and for the time being in force, are held by the applicant.
> (3) A special licence shall be taken not to be in force with respect to a gaming machine at any time when either that machine is provided for gaming on premises which are not at that time treated by section 22 below as having local authority approval under the Gaming Acts or the licence is not displayed in such manner as may be prescribed by regulations made by the Commissioners.
.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 4
In section 22(1), for paragraphs (a) and (b) there shall be substituted—
> (a) in the case of an ordinary licence—
> (i) to whether the premises in respect of which the licence is granted have or have not local authority approval under the Gaming Acts ; and
> (ii) to the number of machines which, it authorises; and
> (b) in any case, to whether the licence authorises the provision of machines chargeable at the lower or higher rate.
.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 5
In section 23(1)(a), after the word " apply " there shall be inserted " to special licences and shall apply to ordinary licences ".
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 6
@@ -3745,90 +2962,51 @@
- (a) subsection (1) shall cease to have effect;
- (b) in subsection (2), for the words "gaming machine" there shall be substituted " whole-year ordinary licence, one half-year ordinary licence and one quarter-year " and after the word "one", in the second and fourth place, there shall be inserted " of each such ";
- (c) in subsection (3), after the word "licence" there shall be inserted " or licences " and at the end there shall be added " ; but any gaming machine with respect to which there is in force a special licence shall be disregarded for the purposes of this subsection. ";
- (d) in subsection (4), there shall be added at the end " or there are special licences in force with respect to those machines ";
- (e) in subsections (5) and (6), in each case after the words " contravention of " there shall be inserted " section 21(1) above or "; and
- (f) in subsection (6)(a)(ii), for the words "gaming machine" there shall be substituted " ordinary ".
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (e) in subsections (5) and (6), in each case after the words “contravention of" there shall be inserted “ section 21(1) above or ”; and
- (f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 7
- (1) Part II of Schedule 4 shall be amended as follows.
- (2) In paragraphs 6 and 8(2), the words " in respect of any premises " shall, in each case, be omitted.
- (3) For sub-paragraph (3) of paragraph 7 there shall be substituted—
> (3) A gaming machine licence shall expire at the end of the period for which it is granted.
.
- (4) In paragraph 8(1), for the words from " transfer" to the end there shall be substituted—
> (a) transfer an ordinary licence to respect of any premises to a successor in title to the interest in those premises of the person to whom the licence was granted ; and
> (b) where—
> (i) a person holding special licences so requests; and
> (ii) the proper officer is satisfied that it is appropriate to do so and will not result in any person holding any number of special licences less than ten,
> transfer such number of special licences to such other person, as may be specified in the request
.
- (5) In paragraph 9—
- (a) for the words " a gaming machine " there shall be substituted " an ordinary " ;
- (b) in paragraph (a), after the word "licence" there shall be inserted " or, in the case of a whole-year licence, substituting premises in a different named region (within the meaning of section 21(3) of this Act) "; and
- (c) in paragraph (b), for the word "licence", where it first occurs, there shall be substituted " ordinary licence for the same period " and for the word "the", where it last occurs, there shall be substituted " any such ".
- (6) In paragraph 10, in sub-paragraph (1), for the words "a gaining machine" there shall be substituted " an ordinary " and in sub-paragraph (3) the words from "except" to the end shall be omitted.
- (7) For sub-paragraphs (1) and (2) of paragraph 11 there shall be substituted the following sub-paragraphs—
> (1) Where the holder of a gaming machine licence surrenders it to the proper officer at a time when the licence has at least three months to run, he shall, subject to any provision made by regulations under paragraph 11A below, be entitled to a repayment of duty equal to the appropriate fraction of the duty paid on the grant of the licence, the appropriate fraction being—
> (a) in the case of a half-year licence, 5/11ths;
> (b) in the case of a whole-year licence surrendered not more than three months after the date on which the period for which it was granted began, 7/10ths;
> (c) in the case of a whole-year licence surrendered more than three, but not more than six, months after that date, 9/20ths; and
> (d) in the case of a whole-year licence surrendered more than six months after that date, 3/20ths.
> (2) A special licence shall not be surrendered unless the Commissioners are satisfied that, if it is surrendered, its holder will (having regard to any other licences surrendered at the same time) hold at least ten, or cease to hold any, special licences.
.
- (8) In sub-paragraph (3) of paragraph 11 for the words "Sub-paragraph (2)" there shall be substituted " Sub-paragraph (1) " and for the words " that section " there shall be substituted the words " section 21(1) or 24 of this Act ".
- (9) After paragraph 11 there shall be inserted—
> (11A)
> (1) For the purpose of giving credit, on the taking out of a gaming machine licence in certain circumstances where duty has been paid on one or more previous licences, the Commissioners may make regulations providing that, in prescribed cases, the amount of duty payable on a gaming machine licence shall, subject to prescribed conditions, be reduced by a prescribed amount.
> (2) Regulations under this paragraph may make provision modifying, or excluding, the application of paragraph 11 above in cases in which duty is reduced in accordance with the regulations.
.
- (10) In paragraph 12, for the words " a gaming machine " there shall be substituted " , an ordinary ".
- (11) In paragraph 13, for the words from " gaming machines provided " to " in force " there shall be substituted—
> (a) gaming machines provided on any premises in respect of which an ordinary licence is in force ; and
> (b) gaming machines in respect of which special licences are in force
.
- (12) In paragraph 17(1), for the words " section 24 " there shall be substituted " section 21(1) or 24 ".
- (13) In paragraph 18, for the words from "either" to the end of paragraph (b) there shall be substituted
> the officer is satisfied, having regard to the number and description of—
> (a) those machines which are authorised by the ordinary licence or licences produced to him ; and
> (b) those machines displaying special licences ;
> that there has been a contravention of section 21(1) or 24 of this Act,
.
## PART II — Transitional Provisions
- (2) In paragraphs 6 and 8(2), the words “in respect of any premises" shall, in each case, be omitted.
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) In sub-paragraph (3) of paragraph 11 for the words “Sub-paragraph (2)" there shall be substituted “ Sub-paragraph (1) ” and for the words “that section" there shall be substituted the words “ section 21(1) or 24 of this Act ”.
- (9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (12) In paragraph 17(1), for the words “section 24" there shall be substituted “ section 21(1) or 24 ”.
- (13) In paragraph 18, for the words from “either" to the end of paragraph (b) there shall be substituted “the officer is satisfied, having regard to the number and description of—
- (a) those machines which are authorised by the ordinary licence or licences produced to him; and
- (b) those machines displaying special licences;
that there has been a contravention of section 21(1) or 24 of this Act,".
## Part II — Transitional Provisions
### Whole-year licences during transitional period
@@ -3836,16 +3014,17 @@
- (1) A whole-year ordinary licence in respect of any premises shall, if first having effect after 30th September 1984 but before the latest date specified (in relation to the region in which the premises are situated) in the second column of the following Table, be granted for a period determined by reference to the Table.
| *Region in which premises are situated* | *Date on which licence first has effect* | *Period for which licence is to be granted* |
| Region in which premises are situated | Date on which licence first has effect | Period for which licence is to be granted |
| --- | --- | --- |
| References in this Table to named regions shall be construed as in section 21 of the Betting and Gaming Duties Act 1981. | References in this Table to named regions shall be construed as in section 21 of the Betting and Gaming Duties Act 1981. | References in this Table to named regions shall be construed as in section 21 of the Betting and Gaming Duties Act 1981. |
| 1. First. | (a) Before 1st May 1985. | Seven months beginning with 1st October 1984. |
| 1. First. | (b) After 30th April 1985 but before 1st December 1985. | Seven months beginning with 1st May 1985. |
| | (b) After 30th April 1985 but before 1st December 1985. | Seven months beginning with 1st May 1985. |
| 2. Second. | (a) Before 1st June 1985. | Eight months beginning with 1st October 1984. |
| 2. Second. | (b) After 31st May 1985 but before 1st February 1986. | Eight months beginning with 1st June 1985. |
| | (b) After 31st May 1985 but before 1st February 1986. | Eight months beginning with 1st June 1985. |
| 3. Third. | Before 1st June 1985. | Eight months beginning with 1st October 1984. |
| 4. Fourth. | Before 1st August 1985. | Ten months beginning with 1st October 1984. |
References in this Table to named regions shall be construed as in section 21 of the Betting and Gaming Duties Act 1981.
- (2) Where, by virtue of sub-paragraph (1) above, a whole-year licence is granted for a period of 7, 8 or 10 months, the duty payable on the licence shall be 7/12ths, 8/12ths or, as the case may be, 10/12ths of the appropriate amount set out in the relevant Table in section 23 of the Act of 1981.
- (3) In relation to a whole-year licence falling within sub-paragraph (1) above, paragraph 11 of Schedule 4 to the Act of 1981 shall have effect as if—
@@ -3854,30 +3033,28 @@
- (b) in a case falling within paragraph 11(1)(c), the appropriate fraction were 2/35ths for a seven-month licence, 7/40ths for an eight-month licence and 17/50ths for a ten-month licence; and
- (c) in a case falling within paragraph 11(1)(d). no provision were made for repayment of duty.
## SCHEDULE 4
## PART I — Provisions inserted in Customs and Excise Management Act 1979 as Part VIIIA
## PART II — Further Amendments of 1979 Act
- (c) in a case falling within paragraph 11(1)(d), no provision were made for repayment of duty.
## Schedule 4
## Part I — Provisions Inserted in Customs and Excise Management Act 1979 as Part VIIIA
## Part II — Further Amendments of 1979 Act
##### 1
In section 1 (interpretation) the following definitions shall be inserted at the appropriate places—
> - 'designation order' has the meaning given by section 100A(5);
> - ' free zone' has the meaning given by section 100A(2);
> - ' free zone goods' has the meaning given by section 100B(2);
> - 'free zone regulations' has the meaning given by section 100B(1);
.
> “*designation order*” has the meaning given by section 100A(5);
> “*free zone*” has the meaning given by section 100A(2);
> “*free zone goods*” has the meaning given by section 100B(2);
> “*free zone regulations*” has the meaning given by section 100B(1);.
##### 2
In section 31(1) (power to make regulations controlling the movement of goods)—
- (a) in paragraph (a) after the words " clearance out of charge of such goods " there shall be inserted the words " , a free zone "; and
- (a) in paragraph (a) after the words “clearance out of charge of such goods" there shall be inserted the words “ , a free zone ”; and
- (b) after paragraph (a) there shall be inserted—
@@ -3886,47 +3063,37 @@
> (ii) such a place and a free zone, and
> (iii) a free zone and another free zone;
.
##### 3
In section 37 (entry of goods on importation)—
- (a) in subsection (2), the following paragraph shall be inserted after paragraph (a)—
> (aa) free zone goods (other than goods which are chargeable with any excise duty);
;
- (b) in subsection (3), the following paragraph shall be inserted after paragraph (a)—
> (aa) in the case of goods which are chargeable with any excise duty, as free zone goods;
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 4
In section 119(1) (delivery of imported goods on giving of security for duty) after “warehouse" there shall be inserted the words “ or free zone ”.
##### 5
In section 159 (power to examine and take account goods), in subsection (1) there shall be inserted after paragraph (b)—
> (bb) which are in a free zone; or
.
##### 4
In section 119(1) (delivery of imported goods on giving of security for duty) after "warehouse" there shall be inserted the words " or free zone ".
##### 5
In section 159 (power to examine and take account of goods), in subsection (1) there shall be inserted after paragraph (b)—
> (bb) which are in a free zone; or
##### 6
In section 164 (power to search persons) in subsection (4) there shall be inserted after paragraph (e)—
> (ee) any person in, entering or leaving a free zone;
.
##### 6
In section 164 (power to search persons) in subsection (4) there shall be inserted after paragraph (e)—
> (ee) any person in, entering or leaving a free zone ;
.
## SCHEDULE 5
## Schedule 5
##### 1
In paragraph (d) of subsection (3) of section 37 (entry of goods on importation for inward processing) after the words " inward processing " there shall be inserted the words " or other processing under Community arrangements ".
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 2
@@ -3937,69 +3104,58 @@
> (a) provide that where the importer is authorised for the purposes of this section, the entry may consist of an initial entry and a supplementary entry; and
> (b) may make such supplementary provision in connection with entries consisting of initial and supplementary entries as the Commissioners think fit.
> (2) Where an initial entry of goods has been accepted the goods may, on the importer giving security by deposit of money or otherwise to the satisfaction of the Commissioners for payment of the unpaid duty, be delivered without payment of any duty chargeable in respect of the goods, but any such duty shall be paid within such time as the Commissioners may direct.
> (3) An importer who makes an initial entry shall complete the entry by delivering the supplementary entry within such time as the Commissioners may direct
> (3) An importer who makes an initial entry shall complete the entry by delivering the supplementary entry within such time as the Commissioners may direct.
> (4) For the purposes of the customs and excise Acts an entry of goods shall be taken to have been delivered when an initial entry of the goods has been delivered, and accepted when an initial entry has been accepted.
> (37B)
> (37B) the goods may be delivered before an entry of them has been delivered or any duty chargeable in respect of them has been paid.
> (1) The Commissioners may, if they think fit, direct that where—
> (a) such goods as may be specified in the direction are imported by an importer authorised for the purposes of this subsection ;
> (a) such goods as may be specified in the direction are imported by an importer authorised for the purposes of this subsection;
> (b) the importer has delivered a document relating to the goods to the proper officer, in such form and manner, containing such particulars and accompanied by such documents as the Commissioners may direct; and
> (c) the document has been accepted by the proper officer,
> (c) the document has been accepted by the proper officer.
> the goods may be delivered before an entry of them has been delivered or any duty chargeable in respect of them has been paid.
> (2) The Commissioners may, if they think fit, direct that where—
> (a) such goods as may be specified in the direction are imported by an importer authorised for the purposes of this subsection ;
> (a) such goods as may be specified in the direction are imported by an importer authorised for the purposes of this subsection;
> (b) the goods have been removed from the place of importation to a place approved by the Commissioners for the clearance out of charge of such goods; and
> (c) the conditions mentioned in subsection (3) below have been satisfied,
> the goods may be delivered before an entry of them has been delivered or any duty chargeable in respect of them has been paid.
> (3) The conditions are that—
> (a) on the arrival of the goods at the approved place the importer delivers to the proper officer a notice of the arrival of the goods in such form and containing such particulars as may be required by the directions;
> (b) within such time as may be so required the importer enters such particulars of the goods and such other information as may be so required in a record maintained by him at such place as the proper officer may require ; and
> (b) within such time as may be so required the importer enters such particulars of the goods and such other information as may be so required in a record maintained by him at such place as the proper officer may require; and
> (c) the goods are kept secure in the approved place for such period as may be required by the directions.
> (4) The Commissioners may direct that the condition mentioned in subsection (3)(a) above shall not apply in relation to any goods specified in the direction and such a direction may substitute another condition.
> (5) No goods shall be delivered under this section unless the importer gives security by deposit of money or otherwise to the satisfaction of the Commissioners for the payment of any duty chargeable in respect of the goods which is unpaid.
> (6) Where goods of which no entry has been made have been delivered under this section, the importer shall deliver an entry of the goods under section 37(1) above within such time as the Commissioners may direct.
> (7) For the purposes of section 43(2)(a) below such an entry shall be taken to have been accepted—
> (a) in the case of goods delivered by virtue of a direction under subsection (1) above, on the date on which the document mentioned in that subsection was accepted ; and
> (a) in the case of goods delivered by virtue of a direction under subsection (1) above, on the date on which the document mentioned in that subsection was accepted; and
> (b) in the case of goods delivered by virtue of a direction under subsection (2) above, on the date on which particulars of the goods were entered as mentioned in subsection (3)(b) above.
> (37C)
> (1) The Commissioners may, if they think fit—
> (a) authorise any importer for the purposes of section 37A, or 37B(1) or (2) above ; and
> (a) authorise any importer for the purposes of section 37A, or 37B(1) or (2) above; and
> (b) suspend or cancel the authorisation of any importer where it appears to them that he has failed to comply with any requirement imposed on him by or under this Part of this Act or that there is other reasonable cause for suspension or cancellation.
> (2) The Commissioners may give directions—
> (a) imposing such requirements as they think fit on any importer authorised under this section ; or
> (a) imposing such requirements as they think fit on any importer authorised under this section; or
> (b) varying any such requirements previously imposed.
> (3) If any person without reasonable excuse contravenes any requirement imposed by or under section 37A, 37B or this section he shall be liable on summary conviction to a penalty of level 4 on the standard scale.
##### 3
In section 171 (general provisions as to offences and penalties) after subsection (2) there shall be inserted the following subsection—
> (2A) In this Act " the standard scale " has the meaning assigned to it by section 75 of the Criminal Justice Act 1982 and for the purposes of this subsection—
> (a) section 37 of that Act; and
> (b) an order under section 143 of the Magistrates' Courts Act 1980 which alters the sums specified in subsection (2) of section 37,
> shall extend to Northern Ireland, and section 75 of the 1982 Act shall have effect as if after the words " England and Wales " there were inserted the words " or Northern Ireland
.
## SCHEDULE 6
## PART I — Food
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
## Schedule 6
## Part I — Food
##### 1
In Group 1 (Food), in Note (3) (which provides that a supply in the course of catering includes a supply for consumption on the premises) after the word " includes " there shall be inserted " (a) " and at the end of the Note there shall be added
In Group 1 (Food), in Note (3) (which provides that a supply in the course of catering includes a supply for consumption on the premises) after the word “includes" there shall be inserted “(a)" and at the end of the Note there shall be added
> and
> (b) any supply of hot food for consumption off those premises; and for the purpose of paragraph (b) above ' hot food' means food which, or any part of which,—
> (i) has been heated for the purpose of enabling it to be consumed at a temperature above the ambient air temperature; and
> (ii) is at the time of the supply above that temperature
.
## PART II — Construction of buildings etc.
> (b) any supply of hot food for consumption off those premises;
> and for the purpose of paragraph (b) above “hot food" means food which, or any part of which,—
> (i) has been heated for the purpose of enabling it to be consumed at a temperature above the ambient air temperature; and
> (ii) is at the time of the supply above that temperature.
## Part II
##### 2
Group 8 (construction of buildings etc.) shall be amended in accordance with this Part of this Schedule.
##### 3
@@ -4040,43 +3196,44 @@
> (b) materials for the construction of fitted furniture, other than kitchen furniture; or
> (c) domestic electrical or gas appliances, other than those designed to provide space heating or water heating or both.
## PART III — Protected Buildings
## Part III — Protected Buildings
##### 8
After Group 8 there shall be inserted the following—
> (1) The granting, by a person substantially reconstructing a protected building, of a major interest in, or in any part of, the building or its site.
> (2) The supply, in the course of an approved alteration of a protected building, of any services other than the services of an architect, surveyor or any person acting as consultant or in a supervisory capacity.
> (1) ' Protected building' means a building which is—
> Item No.
> (1) The granting by a person substantially reconstructing a protected building, of a major interest in, or in any part of, the building or its site.
> (2) The supply, in the course of an approved alteration of a protected building, of any services other than services of an arcitect, surveyor or any person acting as consultant or in a supervisory capacity.
> Notes
> (1) “*Protected building*” means a building which is—
> (a) a listed building, within the meaning of—
> (i) the Town and Country Planning Act 1971 ; or
> (i) the Town and Country Planning Act 1971; or
> (ii) the Town and Country Planning (Scotland) Act 1972; or
> (iii) the Planning (Northern Ireland) Order 1972 ; or
> (iii) the Planning (Northern Ireland) Order 1972 or
> (b) a scheduled monument, within the meaning of—
> (i) the Ancient Monuments and Archaeological Areas Act 1979 ; or
> (i) the Ancient Monuments and Arcaelogical Areas Act 1979; or
> (ii) the Historic Monuments Act (Northern Ireland) 1971.
> (2) For the purposes of item 1, a protected building shall not be regarded as substantially reconstructed unless the reconstruction is such that at least one of the following conditions is fulfilled when the reconstruction is completed—
> (a) that, of the works carried out to effect the reconstruction, at least three-quarters, measured by reference to cost, are of such a nature that the supply of services (other than excluded services) materials and other items to carry out the works, would, if supplied by a taxable person, be within either item 2 of this Group or item 3 of Group 8 above, as it applies to a supply by a person supplying services within item 2 of this Group ; and
> (a) that, of the works carried out to effect the reconstruction, at least three-quarters, measured by reference to cost, are of such a nature that the supply of services (other than excluded services) materials and other items to carry out the works, would, if supplied by a taxable person, be within either item 2 of this Group or item 3 of Group 8 above, as it applies to a supply by a person supplying services within item 2 of this Group; and
> (b) that the reconstructed building incorporates no more of the original building (that is to say, the building as it was before the reconstruction began) than the external walls, together with other external features of architectural or historic interest;
> and in paragraph (a) above ' excluded services' means the services of an architect, surveyor or other person acting as consultant or in a supervisory capacity.
> (3) ' Approved alteration' means,—
> (a) in the case of a protected building which is an ecclesiastical building which is for the time being used for ecclesiastical purposes or would be so used but for the works in question, any works of alteration ; and
> and, in paragraph (a) above “*excluded services*” means the services of an architect, surveyor or other person acting as consultant or in a supervisory capacity.
> (3) “*Approved alteration*” means,—
> (a) in the case of a protected building which is an ecclesiastical building which is for the time being used for ecclesiastical purposes or would be so used but for the works in question, any works of alteration; and
> (b) in the case of a protected building which is a scheduled monument within the meaning of the Historic Monuments Act (Northern Ireland) 1971 and in respect of which a protection order, within the meaning of that Act, is in force, works of alteration for which consent has been given under section 10 of that Act; and
> (c) in any other case, works of alteration which may not, or
> but for the existence of a Crown interest or Duchy interest could not, be carried out unless authorised under, or under any provision of,—
> (c) in any other case, works of alteration which may not, or but for the existence of a Crown interest or Duchy interest could not, be carried out unless authorised under, or under any provision of,—
> (i) Part IV of the Town and Country Planning Act 1971,
> (ii) Part IV of the Town and Country Planning (Scotland) Act 1972,
> (iii) Part V of the Planning (Northern Ireland) Order 1972, or
> (iv) Part I of the Ancient Monuments and Archaeological Areas Act 1979,
> and for which, except in the case of a Crown interest or Duchy interest, consent has been obtained under any provision of that Part;
> and in paragraph (c) above 'Crown interest' and 'Duchy interest ' have the same meaning as in section 50 of the said Act of 1979.
> (iv) Part I of the Ancient Monuments and Archaelogical Areas Act 1979,
> and for which, except in the case of a Crown interest or Duchy interest, consent has been obtained under any provision of that Part;
> and in paragraph (c) above “Crown interest" and “Duchy interest" have the same meaning as in section 50 of the said Act of 1979.
> (4) For the purposes of paragraph (a) of Note (3), a building used or available for use by a minister of religion wholly or mainly as a residence from which to perform the duties of his office shall be treated as not being an ecclesiastical building.
> (5) Where the benefit of the consideration for the grant of a major interest as described in item 1 accrues to the person substantially reconstructing the protected building but that person is not the grantor, he shall be treated for the purposes of that item as the person making the grant.
> (6) In item 2 ' alteration' does not include repair or maintenance ; and where any work consists partly of an approved alteration and partly of other work, an apportionment shall be made to determine the supply which falls within item 2.
> (7) Note (2) to Group 8 above applies in relation to item 2 of this Group as it applies in relation to item 2 of that Group.
## SCHEDULE 7
> (6) In item 2 “alteration" does not include repair or maintenance; and where any work consists partly of an approved alteration and partly of other work, an apportionment shall be made to determine the supply which falls within item 2.
> (7) Note (2) to Group above applies in relation to item 2 of this Group as it applies in relation to item 2 of that Group.
## Schedules 7—9
##### 1
@@ -4733,43 +3890,13 @@
##### 1
- (1) Subject to the provisions of this Schedule, for the purposes of the provisions mentioned in sub-paragraph (2) below—
- (a) the commercial letting of furnished holiday accommodation in respect of which the profits or gains are chargeable under Case VI of Schedule D shall be treated as a trade; and
- (b) all such lettings made by a particular person or partnership or body of persons shall be treated as one trade.
- (2) The provisions mentioned in sub-paragraph (1) above are—
- (a) section 4(2) of the Taxes Act (payment of income tax in two equal instalments);
- (b) sections 168 to 175 and 177 to 178 of the Taxes Act and section 30 of the Finance Act 1978 (relief for losses) ;
- (c) subsection (9)(c) of section 226 of the Taxes Act (retirement annuity contracts);
- (d) subsection (1)(c) of section 530 of that Act (earned income) ;
- (e) Chapter I of Part III of the Finance Act 1971 (capital allowances) ;
- (f) sections 115 to 120 of the Capital Gains Tax Act 1979 (roll over relief for replacement of business assets) ;
- (g) section 124 of that Act (transfer of business on retirement) ;
- (h) section 126 of that Act (relief for gifts of business assets);
- (i) section 136 of that Act (relief in respect of loans to traders) ; and
- (j) section 39 of the Finance Act 1980 (relief for pre-trading expenditure).
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Losses and pre-trading expenditure
##### 2
- (1) In their application by virtue of paragraph 1 above section 175(1) of the Taxes Act (treatment of interest as a loss for purposes of carry-forward and carry-back) and section 39(1) of the Finance Act 1980 shall have effect as if for the references in those sections to Case I of Schedule D there were substituted references to Case VI of that Schedule.
- (2) No relief shall be given to an individual under section 30 of the Finance Act 1978, as it applies by virtue of paragraph 1 above, in respect of a loss sustained in any year of assessment, if any of the accommodation in respect of which the trade is carried on in that year was first let by him as furnished accommodation more than three years before the beginning of that year of assessment.
- (3) Relief shall not be given for the same loss or the same portion of a loss both under any of the provisions mentioned in paragraph 1(2)(b) above, as they apply by virtue of this Schedule, and under any other provision of the Tax Acts.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Expenditure
@@ -4781,35 +3908,23 @@
##### 4
- (1) Subject to sub-paragraph (2) below, for the purposes of the provisions mentioned in sub-paragraph (2)(f) to (i) of paragraph 1 above as they apply by virtue of that paragraph, where in any year of assessment a person makes a commercial letting of furnished holiday accommodation—
- (a) the accommodation shall be taken to be used in that year only for the purposes of the trade of making such lettings ; and
- (b) that trade shall be taken to be carried on throughout that year.
- (2) Sub-paragraph (1) above does not apply to any period in a year of assessment during which the accommodation is neither let commercially nor available to be so let unless it is prevented from being so let or available by any works of construction or repair.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 5
Where—
- (a) a gain to which section 101 of the Capital Gains Tax Act 1979 (relief on disposal of private residence) applies accrues to any individual on the disposal of an asset; and
- (b) by virtue of paragraph 1 above the amount or value of the consideration for the acquisition of the asset is treated as reduced under section 115 or 116 of that Act,
the gain to which section 101 applies shall be reduced by the amount of the reduction mentioned in paragraph (b) above.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Power to make apportionments
##### 6
Where there is a letting of accommodation only part of which is holiday accommodation such apportionments shall be made for the purposes of this Schedule as appear to the inspector, or on appeal the Commissioners, to be just and reasonable.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Adjustments of tax charged
##### 7
Where a person has been charged to income tax, corporation tax or capital gains tax otherwise than in accordance with the provisions of this Schedule, such assessment, reduction or discharge of an assessment or, where a claim for repayment is made, such repayment, shall be made as may be necessary to give effect to those provisions.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
## SCHEDULE 12
@@ -5059,21 +4174,17 @@
## SCHEDULE 13
## PART I — Application of Provisions Relating to Gilt-Edged Securities
## PART I — APPLICATION OF PROVISIONS RELATING TO GILT-EDGED SECURITIES
### Capital Gains Tax Act 1979
##### 1
In section 64 of the Capital Gains Tax Act 1979 (interpretation provisions relating to shares and securities) after the definition of " gilt-edged securities " there shall be inserted—
> - ' qualifying corporate bonds' has the meaning given by section 64 of the Finance Act 1984
.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 2
In section 67(1) of that Act after the words " gilt-edged securities " there shall be added the words " or qualifying corporate bonds ".
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 3
@@ -5087,1971 +4198,1581 @@
##### 4
In section 270(3) of the Taxes Act (groups of companies: gilt-edged securities) after the words " specified securities " there shall be inserted the words " or qualifying corporate bonds as defined in section 64 of the Finance Act 1984 ".
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 5
In Schedule 16 to the Finance Act 1973 (underwriters) at the end of paragraph 7 (exclusion of gilt-edged securities) there shall be added the words " or of qualifying corporate bonds as defined in section 64 of the Finance Act 1984 ".
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 6
In Schedule 6 to the Finance Act 1983 (election for pooling) in paragraph 1(2) (definition of qualifying securities) after paragraph (a) there shall be inserted—
> (aa) qualifying corporate bonds, as defined in section 64 of the Finance Act 1984 ; nor
.
## PART II — Reorganisations, Conversions, Reconstructions etc.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
## PART II — REORGANISATIONS, CONVERSIONS, RECONSTRUCTIONS ETC.
##### 7
- (1) In this Part of this Schedule " relevant transaction " means a reorganisation, conversion of securities or other transaction such as is mentioned in subsection (7) of section 64 of this Act.
- (2) Where the qualifying corporate bond referred to in paragraph (b) of that subsection would constitute the original shares for the purposes of sections 78 to 81 of the principal Act, it is in this Part of this Schedule referred to as " the old asset" and the shares or securities which would constitute the new holding for those purposes are referred to as " the new asset ".
- (3) Where the qualifying corporate bond referred to in section 64(7)(b) of this Act would constitute the new holding for the purposes of sections 78 to 81 of the principal Act, it is in this Part of this Schedule referred to as " the new asset" and the shares or securities which would constitute the original shares for those purposes are referred to as " the old asset ".
- (4) In this Part of this Schedule " the principal Act" means the Capital Gains Tax Act 1979.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 8
- (1) So far as the relevant transaction relates to the old asset and the new asset, sections 78 to 81 of the principal Act shall not apply in relation to it.
- (2) In accordance with sub-paragraph (1) above, the new asset shall not be treated as having been acquired on any date other than the date of the relevant transaction or, subject to sub-paragraphs (3) and (4) below, for any consideration other than the market value of the old asset as determined immediately before that transaction.
- (3) If, on the relevant transaction, the person concerned receives, or becomes entitled to receive, any sum of money which, in addition to the new asset, is by way of consideration for the old asset, that sum shall be deducted from the consideration referred to in sub-paragraph (2) above.
- (4) If, on the relevant transaction, the person concerned gives any sum of money which, in addition to the old asset, is by way of consideration for the new asset, that sum shall be added to the consideration referred to in sub-paragraph (2) above.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 9
In any case where—
- (a) the old asset consists of a qualifying corporate bond, and
- (b) the relevant transaction takes place at such a time that, if there were then a disposal of the old asset, it would be a disposal within section 67 of the principal Act,
then, so far as it relates to the old asset and the new asset, the relevant transaction shall be treated for the purposes of that Act as a disposal of the old asset and an acquisition of the new asset.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 10
- (1) Except in a case falling within paragraph 9 above, so far as it relates to the old asset and the new asset, the relevant transaction shall be treated for the purposes of the principal Act as not involving any disposal of the old asset but—
- (a) there shall be calculated the chargeable gain or allowable loss that would have accrued if, at the time of the relevant transaction, the old asset had been disposed of for a consideration equal to its market value immediately before that transaction; and
- (b) subject to paragraph 11 below, the whole or a corresponding part of the chargeable gain or allowable loss mentioned in paragraph (a) above shall be deemed to accrue on a subsequent disposal of the whole or part of the new asset (in addition to any gain or loss that actually accrues on that disposal); and
- (c) if that subsequent disposal is within section 67 of the principal Act, that section shall have effect only in relation to any gain or loss that actually accrues and not in relation to any gain or loss which is deemed to accrue by virtue of paragraph (b) above.
- (2) Paragraphs (b) and (c) of sub-paragraph (1) above shall not apply to any disposal falling within the provisions of—
- (a) section 44(1) of the principal Act (disposals between husband and wife); or
- (b) section 49(4) of that Act (disposals by personal representatives to legatees); or
- (c) section 273(1) of the Taxes Act (disposals within a group of companies);
but a person who has acquired the new asset on a disposal falling within those provisions (and without there having been a previous disposal falling within those provisions or a devolution on death) shall be treated for the purposes of paragraphs (b) and (c) of sub-paragraph (1) above as if the new asset had been acquired by him at the same time and for the same consideration as, having regard to paragraph 8 above, it was acquired by the person making the disposal.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 11
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
## SCHEDULE 14
### Interpretation
##### 1
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Claims for postponement of tax
##### 2
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Tax referable to attributed gains
##### 3
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Initial calculations relevant to tax which may be postponed
##### 4
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Relevant benefits
##### 5
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### The basic rules as to postponement
##### 6
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Effect of subsequent capital payments received by the beneficiary
##### 7
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 8
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Effect of related benefits derived from payments received by close relatives of the beneficiary
##### 9
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Related benefits
##### 10
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Time when postponed tax becomes payable
##### 11
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Balance of capital payments
##### 12
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 13
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Second and later claims
##### 14
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Information
##### 15
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Consequential relief from C.T.T
##### 16
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
## SCHEDULE 15
## PART I — Paragraph to be Inserted in Part I of Schedule 2 To Finance Act 1975
## PART II — Modifications of Provisions Relating to Qualifying Policies
##### 1
In this Part of this Schedule—
- " Schedule 1 " means Schedule 1 to the Taxes Act (qualifying conditions etc.);
- " Schedule 2 " means Schedule 2 to the Finance Act 1975 (certification of qualifying policies etc.) ; and
- " the old policy" and " the new policy " have the same meaning as in paragraph 9 of Schedule 1.
##### 2
- (1) In the application of paragraph 9 of Schedule 1 (substitutions) in any case where—
- (a) the old policy was issued in respect of an insurance made after 17th November 1983 and could not be a qualifying policy by virtue of paragraph 1A of Schedule 2, and
- (b) the new policy is not a new non-resident policy, as defined in the said paragraph 1A,
the rules for the determination of the question whether the new policy is a qualifying policy shall apply with the modifications in sub-paragraph (2) below.
- (2) The modifications referred to in sub-paragraph (1) above are as follows:—
- (a) if, apart from paragraph 1A of Schedule 2, the old policy and any related policy (within the meaning of sub-paragraph (2)(b) of paragraph 9 of Schedule 1) of which account falls to be taken would have been, or would have been capable of being certified qualifying policy under paragraph 1 of Schedule 2, that policy shall be assumed to have been a qualifying policy for the purposes of paragraph 9(2) of Schedule 1 ; and
- (b) if, apart from this paragraph, the new policy would be, or would be capable of being certified as, a qualifying policy, it shall not be such a policy or, as the case may be, be capable of being so certified unless the circumstances are as specified in paragraph 9(3) of Schedule 1 ; and
- (c) in paragraph 9(3)(b) of Schedule 1 the words "either by a branch or agency of theirs outside the United Kingdom or " shall be omitted.
- (3) In the application of paragraph 9 of Schedule 1 in any case where—
- (a) the old policy is a qualifying policy which was issued in respect of an insurance made on or before 17th November 1983 but, if the insurance had been made after that date, the policy could not have been a qualifying policy by virtue of paragraph 1A of Schedule 2, and
- (b) the new policy is issued after 17th November 1983 and is not a new non-resident policy, as defined in the said paragraph 1A,
the rules for the determination of the question whether the new policy is a qualifying policy shall apply with the modification in sub-paragraph (2)(c) above.
##### 3
If, in the case of a substitution of policies falling within sub-paragraph (1) or sub-paragraph (3) of paragraph 2 above, the new policy confers such an option as results in the application to it of sub-paragraph (3) of paragraph 3 of Schedule 2 (amendment of qualifying conditions) the new policy shall be treated for the purposes of that sub-paragraph as having been issued in respect of an insurance made on the same day as that on which was made the insurance in respect of which the old policy was issued.
##### 4
- (1) For the purposes of Schedule 1 and Part I of Schedule 2, a policy of life insurance which was issued—
- (a) in respect of an insurance made on or before 17th November 1983, and
- (b) by a company resident outside the United Kingdom,
shall be treated as issued in respect of an insurance made after that date if the policy is varied after that date so as to increase the benefits secured or to extend the term of the insurance.
- (2) If a policy of life insurance which was issued as mentioned in paragraphs (a) and (b) of sub-paragraph (1) above confers on the person to whom it is issued an option to have another policy substituted for it or to have any of its terms changed, then for the purposes of that sub-paragraph any change in the terms of the policy which is made in pursuance of the option shall be deemed to be a variation of the policy.
## PART III — Modifications of Chargeable Events Legislation
##### 5
In this Part of this Schedule—
- (a) " chargeable event" has, subject to paragraph 6 below, the meaning assigned to it by section 394 of the Taxes Act (life policies) or, as the case may be, section 398 of that Act (capital redemption policies); and
- (b) " new non-resident policy " has the meaning assigned to it by paragraph 1A of Schedule 2 to the Finance Act 1975.
##### 6
If, in the case of a substitution of policies falling within sub-paragraph (1) or sub-paragraph (3) of paragraph 2 above, the new policy is a qualifying policy, section 394 of the Taxes Act shall have effect with the following modifications:—
- (a) the surrender of the rights conferred by the old policy shall not be a chargeable event; and
- (b) the new policy shall be treated as having been issued in respect of an insurance made on the day referred to in paragraph 3 above.
##### 7
If at any time neither the conditions in sub-paragraph (3) nor the conditions in sub-paragraph (4) of paragraph 1A of Schedule 2 to the Finance Act 1975 are fulfilled with respect to a new non-resident policy which has previously become a qualifying policy, then, from that time onwards, Chapter III of Part XIV of the Taxes Act shall apply in relation to the policy as if it did not fall within subsection (2) of section 394 of that Act (qualifying policies).
##### 8
- (1) On the happening of a chargeable event in relation to a new non-resident policy or a new offshore capital redemption policy, the amount which, apart from this paragraph, would by virtue of section 395 of the Taxes Act be treated as a gain arising in connection with the policy shall be reduced by multiplying it by a fraction of which—
- (a) the denominator is the number of days in the period for which the policy has run before the happening of the chargeable event; and
- (b) the numerator is the number of days in the period referred to in paragraph (a) above on which the policy holder was resident in the United Kingdom.
- (2) The calculation of the number of days in the period referred to in sub-paragraph (1) above shall be made in like manner as is provided in the second paragraph of subsection (3) of section 400 of the Taxes Act (substituting a reference to the number of days for the reference in that paragraph to the number of years).
##### 9
- (1) Subject to sub-paragraph (2) below, where, under section 395 of the Taxes Act, a gain (reduced in accordance with paragraph 8 above) is to be treated as arising in connection with a new non-resident policy or a new offshore capital redemption policy—
- (a) section 399 of that Act shall have effect, in relation to the gain, as if subsection (4) were omitted ; and
- (b) the gain shall be chargeable to tax under Case VI of Schedule D ;
but any relief under section 400 of the Taxes Act shall be computed as if this paragraph had not been enacted.
- (2) Paragraphs (a) and (b) of sub-paragraph (1) above do not apply to a gain arising in connection with a new non-resident policy if the conditions in either sub-paragraph (3) or sub-paragraph (4) of paragraph 1A of Schedule 2 to the Finance Act 1975 are fulfilled at all times between the date on which the policy was issued and the date on which the gain is treated as arising.
##### 10
Where a claim is made under section 400 of the Taxes Act in respect of the amount of a gain treated as arising in connection with a new non-resident policy or a new offshore capital redemption policy (with or without other amounts), the " appropriate fraction " which, in accordance with subsection (2) of that section, is to be applied to that amount shall be modified by deducting from the number of complete years referred to in subsection (3) of that section any complete years during which the policy holder was not resident in the United Kingdom.
##### 11
Paragraph 18 of Schedule 2 to the Finance Act 1975 (which modifies the operation of section 400(3) of the Taxes Act when there is more than one chargeable event of a particular description) shall not apply in relation to a new non resident policy or a new offshore capital redemption policy.
## SCHEDULE 16
### General
##### 1
- (1) The company shall be assumed to be resident in the United Kingdom.
- (2) Nothing in sub-paragraph (1) above requires it to be assumed that there is any change in the place or places at which the company carries on its activities.
- (3) For the avoidance of doubt, it is hereby declared that, if any sums forming part of the company's profits for an accounting period have been received by the company without any deduction of or charge to tax by virtue of section 99 or section 100 of the Taxes Act (securities held by non-residents), the effect of the assumption in sub-paragraph (1) above is that those sums are to be brought within the charge to tax for the purposes of calculating the company's chargeable profits or corresponding United Kingdom tax.
- (4) In any case where—
- (a) it is at any time necessary for any purpose of this Act to determine the chargeable profits of the company for an accounting period, and
- (b) at that time no direction has been given under section 82(1) of this Act with respect to that or any earlier accounting period of the company,
it shall be assumed, for the purpose of any of the following provisions of this Schedule which refer to the first accounting period in respect of which a direction is given under that section, that such a direction has been given for that period (but not for any earlier period).
- (5) Nothing in this Schedule affects any liability for, or the computation of, corporation tax in respect of a trade which is carried on by a company resident outside the United Kingdom through a branch or agency in the United Kingdom.
##### 2
- (1) The company shall be assumed to have become resident in the United Kingdom (and, accordingly, within the charge to corporation tax) at the beginning of the first accounting period in respect of which a direction is given under section 82(1) of this Act and that United Kingdom residence shall be assumed to continue throughout subsequent accounting periods of the company (whether or not a direction is given in respect of all or any of them) until the company ceases to be controlled by persons resident in the United Kingdom.
- (2) Except in so far as the following provisions of this Schedule otherwise provide, for the purposes of calculating a company's chargeable profits or corresponding United Kingdom tax for any accounting period which is not the first such period referred to in sub-paragraph (1) above (and, in particular, for the purpose of applying any relief which is relevant to two or more accounting periods), it shall be assumed that a calculation of chargeable profits or, as the case may be, corresponding United Kingdom tax has been made for every previous accounting period throughout which the company was, by virtue of sub-paragraph (1) above, assumed to have been resident in the United Kingdom.
##### 3
The company shall be assumed not to be a close company.
##### 4
- (1) Subject to sub-paragraph (2) below, where any relief under the Corporation Tax Acts is dependent upon the making of a claim or election, the company shall be assumed to have made that claim or election which would give the maximum amount of relief and to have made that claim or election within any time limit applicable to it
- (2) If, by notice in writing given to the Board at any time not later than the expiry of the time for the making of an appeal under section 88 of this Act or within such longer period as the Board may in any particular case allow, the United Kingdom resident company which has or, as the case may be, any two or more United Kingdom resident companies which together have, a majority interest in the company so request, the company shall be assumed—
- (a) not to have made any claim or election specified in the notice; or
- (b) to have made a claim or election so specified, being different from one assumed by sub-paragraph (1) above but being one which (subject to compliance with any time limit) could have been made in the case of a company within the charge to corporation tax ; or
- (c) to have disclaimed or required the postponement, in whole or in part, of an allowance if (subject to compliance with any time limit) a company within the charge to corporation tax could have disclaimed the allowance or, as the case may be, required such a postponement.
- (3) For the purposes of this paragraph, a United Kingdom resident company has, or two or more United Kingdom resident companies together have, a majority interest in the company if on the apportionment of the company's chargeable profits for the relevant accounting period under subsection (3) of section 82 of this Act, more than half of the profits—
- (a) which are apportioned to United Kingdom resident companies, and
- (b) which give rise to an assessment on any such companies under subsection (4)(a) of that section,
are apportioned to the United Kingdom resident company or companies concerned.
- (4) In sub-paragraph (3) above " the relevant accounting period " means the accounting period or, as the case may be, the first accounting period in which the relief in question is or would be available in accordance with sub-paragraph (1) above.
### Group relief, etc.
##### 5
The company shall be assumed to be neither a member of a group of companies nor a member of a consortium for the purposes of any provision of the Tax Acts.
##### 6
- (1) In relation to section 256 of the Taxes Act (group income) it shall be assumed—
- (a) that the conditions for the making of an election under subsection (1) are not fulfilled with respect to dividends paid or received by the company ; and
- (b) that the conditions for the making of an election under subsection (2) are not fulfilled with respect to payments made or received by the company.
- (2) References in sub-paragraph (1) above to dividends or payments received by the company apply to any received by another person on behalf of or in trust for the company, but not to any received by the company on behalf of or in trust for another person.
##### 7
The company shall be assumed not to be a subsidiary to which the benefit of any advance corporation tax may be surrendered under section 92 of the Finance Act 1972.
### Company reconstructions
##### 8
Without prejudice to the operation of section 252 of the Taxes Act (company reconstructions without change of ownership) in a case where the company is the predecessor, within the meaning of that section, and a company resident in the United Kingdom is the successor, within the meaning of that section, the assumption that the company is resident in the United Kingdom shall not be regarded as requiring it also to be assumed that the company is within the charge to tax in respect of a trade for the purposes of section 252 of the Taxes Act and, accordingly, except in so far as the company is actually within that charge (by carrying on the trade through a branch or agency in the United Kingdom), it shall be assumed that the company can never be the successor, within the meaning of that section, to another company (whether resident in the United Kingdom or not).
### Losses in pre-direction accounting periods
##### 9
- (1) Subject to sub-paragraph (2) below, this paragraph applies in any case where the company incurred a loss in a trade in an accounting period—
- (a) which precedes the first accounting period in respect of which a direction is given under section 82(1) of this Act (in this paragraph referred to as " the starting period "); and
- (b) which ended less than six years before the beginning of the starting period ; and
- (c) in which the company was not resident in the United Kingdom ;
and in this paragraph any such accounting period is referred to as a " pre-direction period ".
- (2) This paragraph does not apply in any case where a declaration is made under paragraph 11(3) below specifying an accounting period of the company which begins before, or is the same as, the first pre-direction period in which the company incurred a loss as mentioned in sub-paragraph (1) above.
- (3) If a claim is made for the purpose by the United Kingdom resident company or companies referred to in paragraph 4(2) above, the chargeable profits (if any) of the company for accounting periods beginning with that pre-direction period which is specified in the claim and in which a loss is incurred as mentioned in sub-paragraph (1) above shall be determined (in accordance with the provisions of this Schedule other than this paragraph) on the assumption that that pre-direction period was the first accounting period in respect of which a direction was given under section 82(1) of this Act.
- (4) A claim under sub-paragraph (3) above shall be made by notice in writing given to the Board within sixty days of the date of the notice under subsection (1) or subsection (3) of section 88 of this Act relating to the starting period or within such longer period as the Board may in any particular case allow.
- (5) For the purposes of a claim under sub-paragraph (3) above, it shall be assumed that Chapter VI of Part II of this Act was in force before the beginning of the first of the pre-direction periods.
- (6) In determining for the purposes of this paragraph which accounting period of the company is the starting period, no account shall be taken of the effect of any declaration under paragraph 11(3) below.
### Capital allowances
##### 10
- (1) Subject to paragraphs 11 and 12 below, if, in an accounting period falling before the beginning of the first accounting period in respect of which a direction is given under section 82(1) of this Act, the company incurred any capital expenditure on the provision of machinery or plant for the purposes of its trade, that machinery or plant shall be assumed, for the purposes of section 44 of the Finance Act 1971 (writing-down allowances and balancing adjustments), not to have been brought into use for the purposes of that trade until the beginning of that first accounting period, and paragraph 7 of Schedule 8 to that Act (expenditure treated as equivalent to market value at the time the machinery or plant is brought into use) shall apply accordingly.
- (2) This paragraph shall be construed as one with Chapter I of Part III of the Finance Act 1971.
##### 11
- (1) This paragraph applies in any case where it appears to the Board that the reason why no direction was given under section 82(1) of this Act in respect of an accounting period which precedes the starting period was that the effect of any allowance which would be assumed for that preceding period by virtue of this Schedule would be such that—
- (a) the company would not have been considered, to be subject in that accounting period to a lower level of taxation in the territory in which it was resident; or
- (b) the company would have had no chargeable profits for that accounting period; or
- (c) the chargeable profits of the company for that accounting period would not have exceeded £20,000 or such smaller amount as was appropriate in accordance with section 83(1)(d) of this Act.
- (2) In this paragraph " the starting period" means the first accounting period in respect of which a direction is given under section 82(1) of this Act and, in a case where a claim is made under sub-paragraph (3) of paragraph 9 above, no account shall be taken of the effect of that sub-paragraph in determining which accounting period is the starting period for the purposes of this paragraph.
- (3) If, in a case where this paragraph applies, the Board so declare by notice in writing given to every company to which, in accordance with section 88(1) of this Act, notice of the making of the direction relating to the starting period is required to be given, the chargeable profits of that period and every subsequent accounting period and the corresponding United Kingdom tax for every subsequent accounting period shall be determined (in accordance with the provisions of this Schedule other than this paragraph) on the assumption that the accounting period specified in the declaration was the first accounting period in respect of which a direction was given and, accordingly, as if allowances had been assumed in respect of that accounting period and any subsequent accounting period which precedes the starting period.
- (4) Nothing in sub-paragraph (3) above affects the operation of paragraph 9(3) above in a case where the accounting period specified in a claim under the said paragraph 9(3) begins before the period specified in a declaration under sub-paragraph (3) above.
- (5) Subject to sub-paragraph (6) below, the Board shall not make a declaration under sub-paragraph (3) above with respect to an accounting period which precedes the starting period unless the facts are such that—
- (a) assuming the company to have been subject in that period to a lower level of taxation in the territory in which it was resident, and
- (b) assuming the company to have had in that period chargeable profits of such an amount that the condition in section 83(1)(d) of this Act would not be fulfilled,
a direction could have been given in respect of that period under section 82(1) of this Act.
- (6) In its application to a company falling within section 84(3) of this Act, sub-paragraph (5) above shall have effect with the omission of paragraph (a).
- (7) In this paragraph "allowance" means an allowance under Chapter I of Part I of the Capital Allowances Act 1968 or Chapter I of Part III of the Finance Act 1971.
##### 12
- (1) Notwithstanding anything in the preceding provisions of this Schedule, if it appears that the transaction by which an asset was acquired by the company had as its sole or main purpose the reduction of the amount of the company's chargeable profits or, as the case may be, corresponding United Kingdom tax for any accounting period (by virtue of the assumption of a relevant allowance in respect of that asset), it shall be assumed that no relevant allowance is available to the company in respect of expenditure incurred on the acquisition of that asset.
- (2) In sub-paragraph (1) above " relevant allowance " means—
- (a) an initial allowance under Chapter I of Part I of the Capital Allowances Act 1968 (industrial buildings and structures); or
- (b) a first-year allowance, as defined in section 41 of the Finance Act 1971.
### Unremittable overseas income
##### 13
For the purposes of the application of section 418 of the Taxes Act (relief for unremittable income) to the company's income it shall be assumed—
- (a) that any reference in paragraph (a) or paragraph (b) of subsection (1) of that section to the United Kingdom is a refererence to both the United Kingdom and the territory in which the company is in fact resident; and
- (b) that a notice under subsection (2) of that section (expressing a wish to be assessed in accordance with that subsection) may be given on behalf of the company by the United Kingdom resident company or companies referred to in paragraph 4(2) above.
## SCHEDULE 17
## PART I — Acceptable Distribution Policy
##### 1
The provisions of this Part of this Schedule have effect for the purposes of paragraph (a) of subsection (1) of section 83 of this Act.
##### 2
- (1) Subject to sub-paragraph (2) below, a controlled foreign company pursues an acceptable distribution policy in respect of a particular accounting period if, and only if—
- (a) a dividend which is not paid out of specified profits is paid for that accounting period or for some other period which, in whole or in part, falls within that accounting period : and
- (b) the dividend is paid during, or not more than eighteen months after the expiry of, the period for which it is paid or at such later time as the Board may in any particular case allow; and
- (c) the proportion of the dividend or, if there is more than one, of the aggregate of those dividends which is paid to persons resident in the United Kingdom represents at least 50 per cent. of the company's available profits for the accounting period referred to in paragraph (a) above or, where sub-paragraph (4) or sub-paragraph (5) below applies, of the appropriate portion of those profits ;
and for the purposes of this sub-paragraph a dividend which is not paid for a specified period shall be treated as paid for the period or periods the profits of which are, in relation to the dividend, the relevant profits for the purposes of section 506 of the Taxes Act (computation of underlying tax on dividends).
- (2) In the case of a controlled foreign company which is not a trading company, sub-paragraph (1) above shall have effect with the substitution of 90 per cent. for 50 per cent.
- (3) For the purposes of this Part of this Schedule, a dividend represents those profits of the controlled foreign company in question which in relation to that dividend are the relevant profits for the purposes of section 506 of the Taxes Act and, accordingly, where those profits are the profits of a period which falls partly within and partly outside an accounting period of that company, the necessary apportionment shall be made to determine what proportion of those profits is attributable to that accounting period.
- (4) This sub-paragraph applies where—
- (a) throughout the accounting period in question all the issued shares of the controlled foreign company are of a single class, and
- (b) at the end of that accounting period some of those shares are held by persons resident outside the United Kingdom, and
- (c) at no time during that accounting period does any person have an interest in the company other than an interest derived from the issued shares of the company,
and in a case where this sub-paragraph applies the appropriate portion for the purposes of sub-paragraph (1)(c) above is the fraction of which the denominator is the total number of the issued shares of the company at the end of the accounting period in question and, subject to sub-paragraph (8) below, the numerator is the number of those issued shares by virtue of which persons resident in the United Kingdom have interests in the company at that time.
- (5) This sub-paragraph applies where—
- (a) throughout the accounting period in question there are only two classes of issued shares of the controlled foreign company and, of those classes, one (in this paragraph referred to as " non-voting shares ") consists of non-voting fixed-rate preference shares and the other (in this paragraph referred to as " voting shares ") consists of shares which carry the right to vote in all circumstances at general meetings of the company, and
- (b) at the end of that accounting period some of the issued shares of the company are held by persons resident outside the United Kingdom, and
- (c) at no time during that accounting period does any person have an interest in the company other than an interest derived from non-voting shares or voting shares,
and in a case where this sub-paragraph applies the appropriate portion of the profits referred to in sub-paragraph (1)(c) above is the amount determined in accordance with sub-paragraph (6) below.
- (6) The amount referred to in sub-paragraph (5) above is that given by the formula—
$$P×QR+(X−P)×YZ$ where— P is the amount of any dividend falling within paragraphs (a) and (b) of sub-paragraph (1) above which is paid in respect of the non-voting shares or, if there is more than one such dividend, of the aggregate of them; Q is, subject to sub-paragraph (8) below, the number of the nonvoting shares by virtue of which persons resident in the United Kingdom have interests in the company at the end of the accounting period in question; R is the total number at that time of the issued non-voting shares; X is the available profits for the accounting period in question ; Y is, subject to sub-paragraph (8) below, the number of voting shares by virtue of which persons resident in the United Kingdom have interests in the company at the end of that accounting period ; and Z is the total number at that time of the issued voting shares.$
- (7) For the purposes of sub-paragraph (5)(a) above, non-voting fixed-rate preference shares are shares—
- (a) which are fixed-rate preference shares as defined in paragraph 1 of Schedule 12 to the Finance Act 1973 ; and
- (b) which either carry no right to vote at a general meeting of the company or carry such a right which is contingent upon the non-payment of a dividend on the shares and which has not in fact become exercisable at any time prior to the payment of a dividend for the accounting period in question.
- (8) In any case where the immediate interests held by persons resident in the United Kingdom who have indirect interests in a controlled foreign company at the end of a particular accounting period do not reflect the proportion of the shares or, as the case may be, shares of a particular class in the company by virtue of which they have those interests (as in a case where they hold, directly or indirectly, part of the shares in a company which itself holds, directly or indirectly, some or all of the shares in the controlled foreign company) the number of those shares shall be treated as reduced for the purposes of sub-paragraph (4) or, as the case may be, sub-paragraph (6) above to such number as may be appropriate having regard to—
- (a) the immediate interests held by the persons resident in the United Kingdom; and
- (b) any intermediate shareholdings between those interests and the shares in the controlled foreign company.
- (9) The definition of " profits " in section 82(6)(b) of this Act does not apply to any reference in this paragraph to specified profits or to relevant profits for the purposes of section 506 of the Taxes Act
##### 3
- (1) Subject to sub-paragraph (2) below, for the purposes of this Part of this Schedule, the available profits of a controlled foreign company for any accounting period shall be ascertained, subject to sub-paragraph (5) below, by—
- (a) determining what would be the relevant profits of that period for the purposes of section 506 of the Taxes Act if a dividend were paid for that period ; and
- (b) deducting so much of those relevant profits as consists of an excess of capital profits over capital losses.
- (2) If, for any accounting period of the controlled foreign company which—
- (a) is of less than twelve months' duration, and
- (b) is not an accounting period which, but for the coming into operation of this Chapter on 6th April 1984, would have begun before that date and been of at least twelve months' duration,
the available profits, as ascertained under sub-paragraph (1) above, are less than the chargeable profits (determined on the additional assumptions in section 85(3)(a) of this Act), then, if the Board so declare, for the purposes of this Part of this Schedule the available profits for the accounting period shall be those chargeable profits.
- (3) The definition of " profits " in section 82(6)(b) of this Act does not apply to the reference in sub-paragraph (1)(a) above to relevant profits for the purposes of section 506 of the Taxes Act
- (4) In sub-paragraph (1)(b) above " capital profits " means gains—
- (a) which accrue on the disposal of assets ; and
- (b) which, if the company were within the charge to corporation tax in respect of the activities giving rise to those disposals, would not be taken into account as receipts in computing the company's income or profits or gains or losses for the purposes of the Income Tax Acts ;
and the expression " capital losses " shall be construed accordingly.
- (5) In any case where—
- (a) a controlled foreign company pays a dividend for any period out of specified profits, and
- (b) those specified profits represent dividends received by the company, directly or indirectly, from another controlled foreign company,
so much of those specified profits as is equal to the dividend referred to in paragraph (a) above shall be left out of account in determining, for the purposes of this Part of this Schedule, the available profits of the controlled foreign company referred to in that paragraph for any accounting period.
##### 4
- (1) For the purposes of this Part of this Schedule, where—
- (a) a controlled foreign company pays a dividend (in this paragraph referred to as " the initial dividend") to another company which is also not resident in the United Kingdom, and
- (b) that other company or another company which is related to it pays a dividend (in this paragraph referred to as " the subsequent dividend ") to a United Kingdom resident, and
- (c) the subsequent dividend is paid out of profits which are derived, directly or indirectly, from the whole or part of the initial dividend,
so much of the initial dividend as is represented by the subsequent dividend shall be regarded as paid to the United Kingdom resident
- (2) For the purposes of this paragraph, one company is related to another if the other—
- (a) controls directly or indirectly, or
- (b) is a subsidiary of a company which controls directly or indirectly,
at least 10 per cent. of the voting power in the first-mentioned company ; and where one company is so related to another and that other is so related to a third company, the first company is for the purposes of this paragraph related to the third, and so on where there is a chain of companies, each of which is related to the next
## PART II — Exempt Activities
##### 5
- (1) The provisions of this Part of this Schedule have effect for the purposes of paragraph (b) of subsection (1) of section 83 of this Act.
- (2) In the case of a controlled foreign company—
- (a) which is, by virtue of section 84(3) of this Act, presumed to be resident in a territory in which it is subject to a lower level of taxation, and
- (b) the business affairs of which are, throughout the accounting period in question, effectively managed in a territory outside the United Kingdom other than one in which companies are liable to tax by reason of domicile, residence or place of management,
references in the following provisions of this Part of this Schedule to the territory in which that company is resident shall be construed as references to the territory falling within paragraph (b) above or, if there is more than one, to that one of them which may be notified to the Board by the United Kingdom resident company or companies referred to in paragraph 4(2) of Schedule 16 to this Act.
##### 6
- (1) Throughout an accounting period a controlled foreign company is engaged in exempt activities if, and only if, each of the following conditions is fulfilled,—
- (a) that, throughout that accounting period, the company has a business establishment in the territory in which it is resident ; and
- (b) that, throughout that accounting period, its business affairs in that territory are effectively managed there ; and
- (c) that any of sub-paragraphs (2) to (4) below applies to the company.
- (2) This sub-paragraph applies to a company if,—
- (a) at no time during the accounting period in question does the main business of the company consist of either—
- (i) investment business, or
- (ii) dealing in goods for delivery to or from the United Kingdom or to or from connected or associated persons ; and
- (b) in the case of a company which is mainly engaged in wholesale, distributive or financial business in that accounting period, less than 50 per cent. of its gross trading receipts from that business is derived directly or indirectly from connected or associated persons.
- (3) This sub-paragraph applies to a company which is a holding company if at least 90 per cent. of its gross income during the accounting period in question is derived directly from companies which it controls and which, throughout that period,—
- (a) are resident in the territory in which the holding company is resident; and
- (b) are not themselves holding companies, but otherwise are, in terms of this Schedule, engaged in exempt activities ;
and a holding company to which this sub-paragraph applies is in this Part of this Schedule referred to as a " local holding company ".
- (4) This sub-paragraph applies to a company which is a holding company, but not a local holding company, if at least 90 per cent. of its gross income during the accounting period in question is derived directly from companies which it controls and which, throughout that period,—
- (a) are local holding companies; or
- (b) are not themselves holding companies (whether local or not), but otherwise are, in terms of this Schedule, engaged in exempt activities.
- (5) Any reference in sub-paragraph (3) or sub-paragraph (4) above to a company which a holding company controls includes a reference to a trading company in which the holding company holds the maximum amount of ordinary share capital which is permitted under the law of the territory—
- (a) in which the trading company is resident; and
- (b) from whose laws the trading company derives its status as a company.
- (6) The following provisions of this Part of this Schedule have effect in relation to sub-paragraphs (1) to (4) above.
##### 7
- (1) For the purposes of paragraph 6(1)(a) above, a " business establishment'', in relation to a controlled foreign company, means premises—
- (a) which are, or are intended to be, occupied and used with a reasonable degree of permanence ; and
- (b) from which the company's business in the territory in which it is resident is wholly or mainly carried on.
- (2) For the purposes of sub-paragraph (1) above, the following shall be regarded as premises,—
- (a) an office, shop, factory or other building or part of a building ; or
- (b) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources ; or
- (c) a building site or the site of a construction or installation project;
but such a site as is referred to in paragraph (c) above shall not be regarded as " premises " unless the building work or the project, as the case may be, has a duration of at least twelve months.
##### 8
- (1) Subject to sub-paragraph (4) below, the condition in paragraph 6(1)(b) above shall not be regarded as fulfilled unless—
- (a) the number of persons employed by the company in the territory in which it is resident is adequate to deal with the volume of the company's business ; and
- (b) any services provided by the company for persons resident outside that territory are not in fact performed in the United Kingdom.
- (2) For the purposes of sub-paragraph (1)(a) above, persons who are engaged wholly or mainly in the business of the company and whose remuneration is paid by a person connected with, and resident in the same territory as, the company shall be treated as employed by the company.
- (3) In the case of a holding company, sub-paragraph (2) above shall apply with the omission of the words " wholly or mainly ".
- (4) For the purposes of sub-paragraph (1)(b) above, no account shall be taken—
- (a) of services provided through a branch or agency of the controlled foreign company if the profits or gains of the business carried on through the branch or agency are within the charge to tax in the United Kingdom ; or
- (b) of services provided through any other person whose profits or gains from the provision of the services are within the charge to tax in the United Kingdom and who provides the services for a consideration which is, or which is not dissimilar from what might reasonably be expected to be, determined under a contract entered into at arm's length ; or
- (c) of services which are no more than incidental to services provided outside the United Kingdom.
##### 9
- (1) Subject to sub-paragraph (3) below, for the purposes of paragraph 6(2)(a)(i) above, each of the following activities constitutes investment business,—
- (a) the holding of securities, patents or copyrights;
- (b) dealing in securities, other than in the capacity of a broker ;
- (c) the leasing of any description of property or rights ; and
- (d) the investment in any manner of funds which would otherwise be available, directly or indirectly, for investment by or on behalf of any person (whether resident in the United Kingdom or not) who has, or is connected or associated with a person who has, control, either alone or together with other persons, of the controlled foreign company in question.
- (2) In sub-paragraph (1)(b) above "broker" includes any person offering to sell securities to, or purchase securities from, members of the public generally.
- (3) For the purposes of paragraph 6(2) above, in the case of a company which is mainly engaged in banking or any similar business falling within paragraph 11(1)(c) below, nothing in sub-paragraph (1) above shall require the main business of die company to be regarded as investment business.
##### 10
Goods which are actually delivered into the territory in which the controlled foreign company is resident shall not be taken into account for the purposes of paragraph 6(2)(a)(ii) above.
##### 11
- (1) For the purposes of paragraph 6(2)(b) above, each of the following activities constitutes wholesale, distributive or financial business,—
- (a) dealing in any description of goods wholesale rather than retail;
- (b) the business of shipping or air transport, as defined in section 514(1) of the Taxes Act;
- (c) banking or any similar business involving the receipt of deposits, loans or both and the making of loans or investments ;
- (d) the administration of trusts;
- (e) dealing in securities in the capacity of a broker, as defined in paragraph 9(2) above ;
- (f) dealing in commodity or financial futures; and
- (g) insurance business which is long-term business or general business, as defined in section 1 of the Insurance Companies Act 1982.
- (2) In a case where the gross trading receipts of a company include an amount in respect of the proceeds of sale of any description of property or rights, the cost to the company of the purchase of that property or those rights shall be a deduction in calculating the company's gross trading receipts for the purposes of paragraph 6(2)(b) above.
- (3) In the case of a controlled foreign company engaged in a banking or other business falling within sub-paragraph (1)(c) above, no payment of interest received from a company resident in the United Kingdom shall be regarded for the purposes of paragraph 6(2)(b) above as a receipt derived directly or indirectly from connected or associated persons, but it shall be conclusively presumed that the condition in paragraph 6(2)(b) above is not fulfilled if, at any time during the accounting period in question, the amount by which the aggregate value of the capital interests in the company held directly or indirectly by—
- (a) the persons who have control of the company, and
- (b) any person connected or associated with those persons,
exceeds the value of the company's fixed assets is 15 per cent. or more of the amount by which the company's outstanding capital exceeds that value.
- (4) For the purposes of this paragraph, in relation to a controlled foreign company,—
- (a) " capital interest" means an interest in the issued share capital or reserves of the company or in a loan to or deposit with the company or the liability of a guarantor under a guarantee given to or for the benefit of the company;
- (b) except in the case of the liability of a guarantor, the value of a capital interest is its value as shown in the company's accounts ;
- (c) in the case of the liability of a guarantor, the value shall be taken to be the market value of the benefit which the controlled foreign company derives from the provision of the guarantee ;
- (d) the value of the company's fixed assets means the value, as shown in the company's accounts, of the plant, premises and trade investments employed in the company's business ; and
- (e) " outstanding capital" means the total value of all the capital interests in the company, less the value, as shown in the company's accounts, of any advances made by the company to persons resident outside the United Kingdom and falling within paragraph (a) or paragraph (b) of sub-paragraph (3) above.
- (5) For the purposes of sub-paragraph (4) above—
- (a) " trade investments", in relation to a controlled foreign company, means securities any profit on the sale of which would not be brought into account as a trading receipt in computing the chargeable profits of an accounting period in which that profit arose ; and
- (b) the reference in paragraph (e) to advances made to a person by the controlled foreign company includes, in the case of a company which is a person resident outside the United Kingdom and falling within paragraph (a) or paragraph (b) of sub-paragraph (3) above, any securities of that company which are held by the controlled foreign company but are not trade investments, as defined in paragraph (a) above ;
and in this sub-paragraph " securities " includes stocks and shares.
- (6) In the application of paragraph 6(2)(b) above in the case of a controlled foreign company engaged in insurance business of any kind—
- (a) the reference to gross trading receipts which are derived directly or indirectly from connected or associated persons is a reference to those which, subject to sub-paragraph (7) below, are attributable, directly or indirectly, to liabilities undertaken in relation to any of those persons or their property;
- (b) the only receipts to be taken into account are commissions and premiums received under insurance contracts;
- (c) so much of any such commission or premium as is returned is not to be taken into account; and
- (d) when a liability under an insurance contract is reinsured, in whole or in part, the amount of the premium which is attributable, directly or indirectly, to that liability shall be treated as reduced by so much of the premium under the reinsurance contract as is attributable to that liability.
- (7) In determining, in relation to a controlled foreign company to which sub-paragraph (6) above applies, the gross trading receipts referred to in paragraph (a) of that sub-paragraph, there shall be left out of account any receipts under a local reinsurance contract which are attributable to liabilities which—
- (a) are undertaken under an insurance contract made in the territory in which the company is resident; and
- (b) are not reinsured under any contract other than a local reinsurance contract; and
- (c) relate either to persons who are resident in that territory and are neither connected nor associated with the company or to property which is situated there and belongs to persons who are not so connected or associated ;
and in paragraph (a) above " insurance contract" does not include a reinsurance contract.
- (8) In sub-paragraph (7) above " local reinsurance contract" means a reinsurance contract—
- (a) which is made in the territory in which the controlled foreign company is resident; and
- (b) the parties to which are companies which are resident in that territory.
- (9) For the purposes of sub-paragraphs (7) and (8) above, any question as to the territory in which a company is resident shall be determined in accordance with section 84 of this Act and, where appropriate, paragraph 5(2) above ; and, for the purpose of the application of those provisions in accordance with this sub-paragraph, the company shall be assumed to be a controlled foreign company.
##### 12
- (1) Subject to sub-paragraph (2) below, in paragraphs 6 and 8(3) above and sub-paragraphs (4) and (5) below " holding company " means—
- (a) a company the business of which consists wholly or mainly in the holding of shares or securities of companies which are either local holding companies and its 90 per cent. subsidiaries or trading companies and either its 51 per cent. subsidiaries or companies falling within paragraph 6(5) above ; or
- (b) a company which would fall within paragraph (a) above if there were disregarded so much of its business as consists in the holding of property or rights of any description for use wholly or mainly by companies which it controls and which are resident in the territory in which it is resident.
- (2) In determining whether a company is a holding company for the purposes of paragraph 6(3) above (and, accordingly, whether the company is or may be a local holding company), sub-paragraph (1) above shall have effect with the omission from paragraph (a) thereof of the words " either local holding companies and its 90 per cent. subsidiaries or ".
- (3) In its application for the purposes of this paragraph, section 532 of the Taxes Act shall have effect with the omission—
- (a) from subsection (1)(a) of the words " or indirectly "; and
- (b) of subsection (2).
- (4) For the purposes of sub-paragraph (3) or, as the case may be sub-paragraph (4) of paragraph 6 above, as it applies in relation to a holding company part of whose business consists of activities other than the holding of shares or securities or the holding of property or rights as mentioned in paragraph (a) or paragraph (b) of sub-paragraph (1) above, the company's gross income during any accounting period shall be determined as follows—
- (a) there shall be left out of account so much of what would otherwise be the company's gross income as is derived from any activity which, if it were the business in which the company is mainly engaged, would be such that paragraph 6(2) above would apply to the company ; and
- (b) to the extent that the receipts of the company from any other activity include receipts from the proceeds of sale of any description of property or rights, the cost to the company of the purchase of that property or those rights shall (to the extent that the cost does not exceed the receipts) be a deduction in calculating the company's gross income, and no other deduction shall be made in respect of that activity.
- (5) For the purposes of sub-paragraphs (3) and (4) of paragraph 6 above, so much of the income of a holding company as—
- (a) is derived directly from another company which it controls and which is not a holding company but otherwise is, in terms of this Schedule, engaged in exempt activities, and
- (b) was or could have been paid out of any non-trading income of that other company which is derived directly or indirectly from a third company connected or associated with it,
shall be treated, in relation to the holding company, as if it were not derived directly from companies which it controls.
- (6) The reference in sub-paragraph (5) above to the non-trading income of a company is a reference to so much of its income as, if the company were carrying on its trade in the United Kingdom, would not be within the charge to corporation tax under Case I of Schedule D.
## PART III — The Public Quotation Condition
##### 13
- (1) The provisions of this Part of this Schedule have effect for the purposes of paragraph (c) of subsection (1) of section 83 of this Act.
- (2) Subject to paragraph 14 below, a controlled foreign company fulfils the public quotation condition with respect to a particular accounting period if—
- (a) shares in the company carrying not less than 35 per cent. of the voting power in the company (and not being shares entitled to a fixed rate of dividend, whether with or without a further right to participate in profits) have been allotted unconditionally to, or acquired unconditionally by, the public and, throughout that accounting period, are beneficially held by the public ; and
- (b) within the period of twelve months ending at the end of the accounting period, any such shares have been the subject of dealings on a recognised stock exchange situated in the territory in which the company is resident; and
- (c) within that period of twelve months the shares have been quoted in the official list of such a recognised stock exchange.
##### 14
- (1) The condition in paragraph 13(2) above is not fulfilled with respect to an accounting period of a controlled foreign company if at any time in that period the total percentage of the voting power in the company possessed by all of the company's principal members exceeds 85 per cent.
- (2) For the purposes of paragraph 13(2) above, shares in a controlled foreign company shall be deemed to be beneficially held by the public if they are held by any person other than—
- (a) a person connected or associated with the company ; or
- (b) a principal member of the company ;
and a corresponding construction shall be given to the reference to shares which have been allotted unconditionally to, or acquired unconditionally by, the public.
##### 15
- (1) References in this Part of this Schedule to shares held by any person include references to any shares the rights or powers attached to which could, for the purposes of section 302 of the Taxes Act (meaning of " control") be attributed to that person under subsection (5) of that section (nominees).
- (2) For the purposes of this Part of this Schedule—
- (a) a person is a principal member of a controlled foreign company if he possesses a percentage of the voting power in the company of more than 5 per cent. and,—
- (i) where there are more than five such persons, if he is one of the five persons who possess the greatest percentages, or
- (ii) if, because two or more persons possess equal percentages of the voting power in the company, there are no such five persons, he is one of the six or more persons (so as to include those two or more who possess equal percentages) who possess the greatest percentages ; and
- (b) a principal member's holding consists of the shares which carry the voting power possessed by him.
- (3) In arriving at the voting power which a person possesses, there shall be attributed to him any voting power which, for the purposes of section 302 of the Taxes Act, would be attributed to him under subsection (5) or subsection (6) of that section (nominees, controlled companies and associates).
- (4) In this Part of this Schedule " share " includes stock.
## PART IV — Reductions in United Kingdom Tax and Diversion of Profits
##### 16
- (1) The provisions of this Part of this Schedule have effect for the purposes of subsection (3) of section 83 of this Act.
- (2) Any reference in paragraphs 17 and 18 below to a transaction—
- (a) is a reference to a transaction reflected in the profits arising in an accounting period of a controlled foreign company; and
- (b) includes a reference to two or more such transactions taken together.
##### 17
- (1) A transaction achieves a reduction in United Kingdom tax if, had the transaction not been effected, any person—
- (a) would have been liable for any such tax or for a greater amount of any such tax ; or
- (b) would not have been entitled to a relief from or repayment of any such tax or would have been entitled to a smaller relief from or repayment of any such tax.
- (2) In this Part of this Schedule and section 83(3) of this Act " United Kingdom tax " means income tax, corporation tax or capital gains tax.
##### 18
It is the main purpose or one of the main purposes of a transaction to achieve a reduction in United Kingdom tax if this is the purpose or one of the main purposes—
- (a) of the controlled foreign company concerned ; or
- (b) of a person who has an interest in that company at any time during the accounting period concerned.
##### 19
- (1) The existence of a controlled foreign company achieves a reduction in United Kingdom tax by a diversion of profits from the United Kingdom in an accounting period if it is reasonable to suppose that, had neither the company nor any company related to it been in existence,—
- (a) the whole or a substantial part of the receipts which are reflected in the controlled foreign company's profits in that accounting period would have been received by a company or individual resident in the United Kingdom; and
- (b) that company or individual or any other person resident in the United Kingdom either—
- (i) would have been liable for any United Kingdom tax or for a greater amount of any such tax ; or
- (ii) would not have been entitled to a relief from or repayment of any such tax or would have been entitled to a smaller relief from or repayment of any such tax.
- (2) For the purposes of sub-paragraph (1) above, a company is related to a controlled foreign company if—
- (a) it is resident outside the United Kingdom; and
- (b) it is connected or associated with the controlled foreign company; and
- (c) in relation to any company or companies resident in the United Kingdom, it fulfils or could fulfil, directly or indirectly, substantially the same functions as the controlled foreign company.
- (3) Any reference in sub-paragraph (1) above to a company resident in the United Kingdom includes a reference to such a company which, if the controlled foreign company in question were not in existence, it is reasonable to suppose would have been established.
## SCHEDULE 18
### Trading losses and group relief etc.
##### 1
- (1) In any case where—
- (a) on the calculation under paragraph 10(1)(a) above, a chargeable gain would have accrued, and
- (b) the consideration for the old asset includes such a sum of money as is referred to in paragraph 8(3) above,
then, subject to sub-paragraph (2) below, the proportion of that chargeable gain which that sum of money bears to the market value of the old asset immediately before the relevant transaction shall be deemed to accrue at the time of that transaction.
- (2) If the inspector is satisfied that the sum of money referred to in sub-paragraph (1)(b) above is small, as compared with the market value of the old asset immediately before the relevant transaction, and so directs, sub-paragraph (1) above shall not apply.
- (3) In a case where sub-paragraph (1) above applies, the chargeable gain which, apart from this paragraph, would by virtue of paragraph 10(1)(b) above be deemed to accrue on a subsequent disposal of the whole or part of the new asset shall be reduced or, as the case may be, extinguished by deducting therefrom the amount of the chargeable gain which, by virtue of sub-paragraph (1) above, is deemed to accrue at the time of the relevant transaction.
## SCHEDULE 14
- (a) an amount of chargeable profits is apportioned to a company resident in the United Kingdom, and
- (b) the company is entitled, or would on the making of a claim be entitled, in computing its profits for the appropriate accounting period, to a deduction in respect of any relevant allowance, and
- (c) for the appropriate accounting period the company has no profits against which a deduction could be made in respect of that allowance or, as the case may be, the amount of that allowance exceeds the profits against which a deduction falls to be made in respect of it,
then, on the making of a claim, a sum equal to corporation tax at the appropriate rate on so much of the relevant allowance or, as the case may be, of the excess of it referred to in paragraph (c) above as is specified in the claim shall be set off against the company's liability to tax under section 82(4)(a) of this Act in respect of the chargeable profits apportioned to it.
- (2) In this paragraph—
- (a) " the appropriate accounting period " means the accounting period for which, by virtue of section 89(2) of this Act, the company is regarded as assessed to corporation tax in respect of the chargeable profits concerned ; and
- (b) "the appropriate rate" means the rate of corporation tax applicable to profits of the appropriate accounting period or, if there is more than one such rate, the average rate over the whole accounting period.
- (3) In this paragraph " relevant allowance " means—
- (a) any loss to which section 177(2) of the Taxes Act applies ;
- (b) any charge on income to which section 248(1) of that Act applies;
- (c) any expenses of management to which section 304(1) of that Act applies ;
- (d) so much of any allowance to which section 74 of the Capital Allowances Act 1968 applies as falls within subsection (3) of that section ; and
- (e) any amount available to the company by way of group relief.
- (4) In any case where, for the appropriate accounting period, an amount would have been available to the company by way of group relief if a claim had been made under section 264 of the Taxes Act, such a claim may be made for the purposes of this paragraph at any time before the end of the accounting period following that in which the assessment under section 82(4)(a) of this Act is made, notwithstanding that the period of two years referred to in section 264(1)(c) of the Taxes Act has expired.
- (5) Where, by virtue of sub-paragraph (1) above, a sum is set off against a liability to tax, so much of the relevant allowance as gives rise to the amount set off shall be regarded for the purposes of the Tax Acts as having been allowed as a deduction against the company's profits in accordance with the appropriate provisions of those Acts.
- (6) In its application to a claim under this paragraph, section 43 of the Taxes Management Act 1970 (time limit for making claims) shall have effect as if, in subsection (2),—
- (a) any reference to an assessment to income tax were a reference to an assessment under section 82(4)(a) of this Act; and
- (b) any reference to a year of assessment were a reference to an accounting period.
### Advance corporation tax
##### 2
- (1) In any case where—
- (a) an amount of chargeable profits is apportioned to a company resident in the United Kingdom, and
- (b) the company has an amount of advance corporation tax which, apart from this paragraph, would, in relation to the appropriate accounting period, be surplus advance corporation tax for the purposes of subsection (3) of section 85 of the Finance Act 1972,
then, on the making of a claim, so much of that advance corporation tax as is specified in the claim and does not exceed the relevant maximum shall be set against the company's liability to tax under section 82(4)(a) of this Act in respect of the chargeable profits apportioned to it, to the extent that that liability has not or could not have been relieved by virtue of paragraph 1 above.
- (2) So much of any advance corporation tax as, by virtue of this paragraph, is set against the company's liability to tax under section 82(4)(a) of this Act in respect of chargeable profits shall be regarded for the purposes of the Tax Acts as not being surplus advance corporation tax within the meaning of section 85 of the Finance Act 1972.
- (3) In this paragraph " the appropriate accounting period " has the same meaning as in paragraph 1 above and " the relevant maximum ", in relation to the liability to tax referred to in sub-paragraph (1) above, is the amount of advance corporation tax that would have been payable (apart from section 89 of the Finance Act 1972) in respect of a distribution made at the end of the appropriate accounting period of an amount which, together with the advance corporation tax in respect of it, is equal to—
- (a) that amount of the chargeable profits apportioned to the company on which it is chargeable to corporation tax for that accounting period, less
- (b) any amount which, for that accounting period, is to be regarded, by virtue of paragraph 1(5) above, as having been allowed as a deduction against the company's profits.
### Gains on disposal of shares in controlled foreign company etc.
##### 3
- (1) This paragraph applies in any case where—
- (a) a direction has been given under section 82(1) of this Act in respect of an accounting period of a controlled foreign company (in this paragraph referred to as "the direction period "); and
- (b) the company's chargeable profits for the direction period have been apportioned among the persons referred to in section 82(3) of this Act; and
- (c) a company resident in the United Kingdom (in this section referred to as " the claimant company ") disposes of—
- (i) shares in the controlled foreign company, or
- (ii) shares in another company which, in whole or in part, give rise to the claimant company's interest in the controlled foreign company,
being, in either case, shares acquired before the end of the direction period ; and
- (d) by virtue of the apportionment referred to in paragraph (b) above, under section 82(4)(a) of this Act a sum is assessed on and recoverable from the claimant company as if it were an amount of corporation tax ; and
- (e) the claimant company makes a claim for relief under this paragraph ;
and in this paragraph the disposal mentioned in paragraph (c) above is referred to as " the relevant disposal".
- (2) Subject to the following provisions of this section, in the computation under Chapter II of Part II of the Capital Gains Tax Act 1979 of the gain accruing on the relevant disposal, the appropriate fraction of the sum referred to in sub-paragraph (1)(d) above shall be allowable as a deduction; but to the extent that any sum has been allowed as a deduction under this sub-paragraph it shall not again be allowed as a deduction on any claim under this paragraph (whether made by the claimant company or another company).
- (3) In relation to the relevant disposal, the appropriate fraction means that of which the numerator is the average market value in the direction period of the shares disposed of and the denominator is the average market value in that period of the interest in the controlled foreign company which, in the case of the claimant company, was taken into account in the apportionment referred to in sub-paragraph (1)(b) above.
- (4) Where, before the relevant disposal,—
- (a) a dividend is paid by the controlled foreign company, and
- (b) the profits out of which the dividend is paid are those from which the chargeable profits referred to in sub-paragraph (1)(b) above are derived, and
- (c) at least one of the two conditions in sub-paragraph (5) below is fulfilled,
this paragraph does not apply in relation to a sum assessed and recoverable in respect of so much of the chargeable profits as corresponds to the profits which the dividend represents.
- (5) The conditions referred to in sub-paragraph (4)(c) above are—
- (a) that the effect of the payment of the dividend is such that the value of the shares disposed of by the relevant disposal is less after the payment than it was before it; and
- (b) that, in respect of a dividend paid or payable on the shares disposed of by the relevant disposal, the claimant company is, by virtue of paragraph 4(2) below, entitled under Part XVIII of the Taxes Act to relief (by way of underlying tax) by reference to sums which include the sum referred to in sub-paragraph (1)(d) above.
- (6) A claim for relief under this paragraph shall be made before the expiry of the period of three months beginning—
- (a) at the end of the accounting period in which the relevant disposal occurs ; or
- (b) if it is later, on the date on which the assessment to tax for which the claimant company is liable by virtue of section 82(4)(a) of this Act becomes final and conclusive.
- (7) In identifying for the purposes of this paragraph shares in a company with shares of the same class which are disposed of by the relevant disposal, shares acquired at an earlier time shall be deemed to be disposed of before shares acquired at a later time.
### Dividends from the controlled foreign company
##### 4
- (1) This paragraph applies in any case where—
- (a) a direction has been given under section 82(1) of this Act in respect of an accounting period of a controlled foreign company, and
- (b) the company's chargeable profits for that period have been apportioned among the persons referred to in section 82(3) of this Act, and
- (c) the controlled foreign company pays a dividend in whole or in part out of the total profits from which (in accordance with section 82(6)(a) of this Act) those chargeable profits are derived.
- (2) Subject to paragraphs 5 and 6 below, where this paragraph applies, the aggregate of the sums assessed on and recoverable from companies resident in the United Kingdom in accordance with section 82(4)(a) of this Act in respect of the chargeable profits referred to in sub-paragraph (1)(b) above shall be treated for the purposes of Part XVIII of the Taxes Act (double taxation relief) as if it were an amount of tax paid in respect of the profits concerned under the law of the territory in which the controlled foreign company was resident and, accordingly, as underlying tax for the purposes of Chapter II of that Part.
- (3) In the following provisions of this paragraph and in paragraphs 5 and 6 below the aggregate of the sums which, under sub-paragraph (2) above, fall to be treated as underlying tax is referred to as the " gross attributed tax ".
- (4) If, in the case of a person who receives the dividend, section 504 or section 505 of the Taxes Act (1imit on credit) has the effect of reducing the amount which (apart from that section) would have been the amount of the credit for foreign tax which is to be allowed to that person, then, for the purposes of sub-paragraph (5) below, the amount of that reduction shall be determined and so much of it as does not exceed the amount of the foreign tax, exclusive of underlying tax, for which credit is to be allowed in respect of the dividend is in that sub-paragraph referred to as " the wasted relief ".
- (5) Except for the purpose of determining the amount of the wasted relief, the gross attributed tax shall be treated as reduced by the aggregate of the wasted relief arising in the case of all the persons falling within sub-paragraph (4) above and, on the making of a claim by any of the companies referred to in sub-paragraph (2) above,—
- (a) the sum assessed on and recoverable from the company in accordance with section 82(4)(a) of this Act in respect of the chargeable profits referred to in sub-paragraph (1)(b) above shall, where appropriate, be reduced ; and
- (b) all such adjustments (whether by repayment of tax or otherwise) shall be made as are appropriate to give effect to any reduction under paragraph (a) above.
##### 5
- (1) In so far as any provision of—
- (a) arrangements having effect by virtue of section 497 of the Taxes Act (relief by agreement with other countries), or
- (b) section 498 of that Act (unilateral relief),
makes relief which is related to foreign dividends received by a company resident in the United Kingdom conditional upon that company either having a particular degree of control of the company paying the dividend or being a subsidiary of another company which has that degree of control, that condition shall be treated as fulfilled in considering whether any such company is by virtue of paragraph 4(2) above entitled to relief under Part XVIII of that Act in respect of any of the gross attributed tax.
- (2) Notwithstanding anything in paragraph 4(2) above, in section 503(2)(b) of the Taxes Act (income from dividends treated as increased by underlying tax) the expression "underlying tax" does not include gross attributed tax.
- (3) In a case where the controlled foreign company pays a dividend otherwise than out of specified profits and, on the apportionment referred to in paragraph 4(1) above, less than the whole of the chargeable profits of the controlled foreign company concerned is apportioned to companies which are resident in the United Kingdom and liable for tax thereon as mentioned in section 82(4)(a) of this Act,—
- (a) the gross attributed tax shall be regarded as attributable to a corresponding proportion of the profits in question, and in this sub-paragraph the profits making up that proportion are referred to as " taxed profits " ;
- (b) so much of the dividend as is received by, or by a successor in title of, any such company shall be regarded as paid primarily out of taxed profits ; and
- (c) so much of the dividend as is received by any other person shall be regarded as paid primarily out of profits which are not taxed profits.
- (4) The reference in sub-paragraph (3)(b) above to a successor in title of a company resident in the United Kingdom is a reference to a person who is such a successor in respect of the whole or any part of that interest in the controlled foreign company by virtue of which an amount of its chargeable profits was apportioned to that company.
##### 6
- (1) In any case where—
- (a) on a claim for relief under paragraph 3 above, the whole or any part of any sum has been allowed as a deduction on a disposal of shares in any company, and
- (b) that sum forms part of the gross attributed tax in relation to a dividend paid by that company, and
- (c) a person receiving the dividend in respect of the shares referred to in paragraph (a) above (in this paragraph referred to as " the primary dividend ") or any other relevant dividend is, by virtue of paragraph 4(2) above, entitled under Part XVIII of the Taxes Act to relief (by way of underlying tax) by reference to the whole or any part of the gross attributed tax,
the amount which, apart from this paragraph, would be available by way of such relief to the person referred to in paragraph (c) above shall be reduced or, as the case may be, extinguished by deducting therefrom the amount allowed by way of relief as mentioned in paragraph (a) above.
- (2) For the purposes of sub-paragraph (1)(c) above, in relation to the primary dividend, another dividend is a relevant dividend if—
- (a) it is a dividend in respect of shares in a company which is resident outside the United Kingdom; and
- (b) it represents profits which, directly or indirectly, consist of or include the primary dividend.
## SCHEDULE 19
## PART I — The Distribution Test
### Requirements as to distributions
##### 1
- (1) For the purposes of this Chapter, an offshore fund pursues a full distribution policy with respect to an account period if—
- (a) a distribution is made for that account period or for some other period which, in whole or in part, falls within that account period; and.
- (b) subject to Part II of this Schedule, the amount of the distribution which is paid to the holders of material and other interests in the fund—
- (i) represents at least 85 per cent. of the income of the fund for that period, and
- (ii) is not less than 85 per cent. of the fund's United Kingdom equivalent profits for that period ; and
- (c) the distribution is made during that account period or not more than six months after the expiry of it; and
- (d) the form of the distribution is such that, if any sum forming part of it were received in the United Kingdom by a person resident there and did not form part of the profits of a trade, profession or vocation, that sum would fall to be chargeable to tax under Case IV or Case V of Schedule D ;
and any reference in this sub-paragraph to a distribution made for an account period includes a reference to any two or more distributions so made or, in the case of paragraph (b), the aggregate of them.
- (2) Subject to sub-paragraph (3) below, with respect to any account period for which—
- (a) there is no income of the fund, and
- (b) there are no United Kingdom equivalent profits of the fund,
the fund shall be treated as pursuing a full distribution policy notwithstanding that no distribution is made as mentioned in sub-paragraph (1) above.
- (3) For the purposes of this Chapter, an offshore fund shall be regarded as not pursuing a full distribution policy with respect to an account period for which the fund does not make up accounts.
- (4) For the purposes of this paragraph—
- (a) where a period for which an offshore fund makes up accounts includes the whole or part of two or more account periods of the fund, then, subject to paragraph (c) below, income shown in those accounts shall be apportioned between those account periods on a time basis according to the number of days in each period which are comprised in the period for which the accounts are made up ;
- (b) where a distribution is made for a period which includes the whole or part of two or more account periods of the fund, then, subject to sub-paragraph (5) below, the distribution shall be apportioned between those account periods on a time basis according to the number of days in each period which are comprised in the period for which the distribution is made;
- (c) where a distribution is made out of specified income but is not made for a specified period, that income shall be attributed to the account period of the fund in which it in fact arose and the distribution shall be treated as made for that account period ; and
- (d) where a distribution is made neither for a specified period nor out of specified income, then, subject to sub-paragraph (5) below, it shall be treated as made for the last account period of the fund which ended before the distribution was made.
- (5) If, apart from this sub-paragraph, the amount of a distribution made, or treated by virtue of sub-paragraph (4) above as made, for an account period would exceed the income of that period, then, for the purposes of this paragraph,—
- (a) if the amount of the distribution was determined by apportionment under sub-paragraph (4)(b) above, the excess shall be re-apportioned, as may be just and reasonable, to any other account period which, in whole or in part, falls within the period for which the distribution was made or, if there is more than one such period, between those periods ; and
- (b) subject to paragraph (a) above, the excess shall be treated as an additional distribution or series of additional distributions made for preceding account periods in respect of which the distribution or, as the case may be, the aggregate distributions would otherwise be less than the income of the period, applying the excess to later account periods before earlier ones, until it is exhausted.
- (6) In any case where—
- (a) for a period which is or includes an account period, an offshore fund is subject to any restriction as regards the making of distributions, being a restriction imposed by the law of any territory outside the United Kingdom, and
- (b) the fund is subject to that restriction by reason of an excess of losses over profits (applying the concepts of " profits " and " losses " in the sense in which and to the extent to which they are relevant for the purposes of the law in question),
then, in determining, for the purposes of the preceding provisions of this paragraph, the amount of the fund's income for that account period, there shall be allowed as a deduction any amount which, apart from this sub-paragraph, would form part of the income of the fund for that account period and which cannot be distributed by virtue of the restriction.
### Funds operating equalisation arrangements
##### 2
- (1) In the case of an offshore fund which throughout any account period operates equalisation arrangements, on any occasion in that period when there is a disposal to which this sub-paragraph applies, the fund shall be treated for the purposes of this Part of this Schedule as making a distribution of an amount equal to so much of the consideration for the disposal as, in accordance with this paragraph, represents income accrued to the date of the disposal.
- (2) Sub-paragraph (1) above applies to a disposal—
- (a) which is a disposal of a material interest in the offshore fund concerned; and
- (b) which is a disposal to which this Chapter applies (whether by virtue of subsection (3) of section 93 of this Act or otherwise) or is one to which this Chapter would apply if subsections (5) and (6) of that section applied generally and not only for the purpose of determining whether, by virtue of subsection (3) of that section, there is a disposal to which this Chapter applies; and
- (c) which is not a disposal with respect to which the conditions in subsection (4) of that section are fulfilled ; and
- (d) which is a disposal to the fund itself or to the persons concerned with the management of the fund (in this paragraph referred to as " the managers ") in their capacity as such.
- (3) On a disposal to which sub-paragraph (1) above applies, the part of the consideration which represents income accrued to the date of the disposal is, subject to sub-paragraph (4) and paragraph 4(4) below, the amount which would be credited to the equalisation account of the offshore fund concerned in respect of accrued income if, on the date of the disposal, the material interest which is disposed of were acquired by another person by way of initial purchase.
- (4) If, after the beginning of the period by reference to which the accrued income referred to in sub-paragraph (3) above is calculated, the material interest disposed of by a disposal to which sub-paragraph (1) above applies was acquired by way of initial purchase (whether or not by the person making the disposal), there shall be deducted from the amount which, in accordance with sub-paragraph (3) above, would represent income accrued to the date of the disposal, the amount which on that acquisition was credited to the equalisation account of the fund in respect of accrued income ; and if in that period there has been more than one such acquisition of that material interest by way of initial purchase, the deduction to be made under this sub-paragraph shall be the amount so credited to the equalisation account on the latest such acquisition prior to the disposal in question.
- (5) Where, by virtue of this paragraph, an offshore fund is treated for the purposes of this Part of this Schedule as making a distribution on the occasion of a disposal, the distribution shall be treated for those purposes—
- (a) as complying with paragraph 1(1)(d) above ; and
- (b) as made out of the income of the fund for the account period in which the disposal occurs ; and
- (c) as paid, immediately before the disposal, to the person who was then the holder of the interest disposed of.
- (6) In any case where—
- (a) a distribution in respect of an interest in an offshore fund is made to the managers of the fund, and
- (b) their holding of that interest is in their capacity as such, and
- (c) at the time of the distribution, the fund is operating equalisation arrangements,
the distribution shall not be taken into account for the purposes of paragraph 1(1) above except to the extent that the distribution is properly referable to that part of the period for which the distribution is made during which that interest has been held by the managers of the fund in their capacity as such.
- (7) Subsection (2) of section 93 applies for the purposes of this paragraph as it applies for the purposes of that section.
### Income taxable under Case IV or Case V of Schedule D
##### 3
- (1) Sub-paragraph (2) below applies if any sums which form part of the income of an offshore fund falling within paragraph (b) or paragraph (c) of subsection (1) of section 94 of this Act are of such a nature that—
- (a) the holders of interests in the fund who are either companies resident in the United Kingdom or individuals domiciled and resident there—
- (i) are chargeable to tax under Case IV or Case V of Schedule D in respect of such of those sums as are referable to their interests ; or
- (ii) if any of that income is derived from assets within the United Kingdom, would be so chargeable had the assets been outside the United Kingdom ; and
- (b) the holders of interests who are not such companies or individuals would be chargeable as mentioned in sub-paragraph (i) or sub-paragraph (ii) above if they were resident in the United Kingdom or, in the case of individuals, if they were domiciled and both resident and ordinarily resident there.
- (2) To the extent that sums falling within sub-paragraph (1) above do not actually form part of a distribution complying with paragraphs 1(1)(c) and 1(1)(d) above, they shall be treated for the purposes of this Part of this Schedule—
- (a) as a distribution complying with those paragraphs and made out of the income of which they form part; and
- (b) as paid to the holders of the interests to which they are referable.
### Commodity income
##### 4
- (1) To the extent that the income of an offshore fund for any account period includes profits from dealing in commodities, one half of those profits shall be left out of account in determining for the purposes of paragraphs 1(1)(b) above and 5 below—
- (a) the income of the fund for that period ; and
- (b) the fund's United Kingdom equivalent profits for that period;
but in any account period in which an offshore fund incurs a loss in dealing in commodities the amount of that loss shall not be varied by virtue of this paragraph.
- (2) In this paragraph, " dealing in commodities" shall be construed as follows—
- (a) " commodities " does not include currency, securities, debts or other assets of a financial nature but, subject to that, means tangible assets which are dealt with on a commodity exchange in any part of the world ; and
- (b) " dealing" includes dealing by way of futures contracts and traded options.
- (3) Where the income of an offshore fund for any account period consists of profits from dealing in commodities and other income then,—
- (a) in determining whether the condition in paragraph 1(1)(b) above is fulfilled with respect to that account period, the expenditure of the fund shall be apportioned in such manner as is just and reasonable between the profits from dealing in commodities and the other income ; and
- (b) in determining whether, and to what extent, any expenditure is deductible under section 304 of the Taxes Act (management expenses of investment companies) in computing the fund's United Kingdom equivalent profits for that period, so much of the business of the fund as does not consist of dealing in commodities shall be treated as a business carried on by a separate company.
- (4) Where there is a disposal to which sub-paragraph (1) of paragraph 2 above applies, then, to the extent that any amount which was or would be credited to the equalisation account in respect of accrued income, as mentioned in sub-paragraph (3) or sub-paragraph (4) of that paragraph, represents profits from dealing in commodities, one half of that accrued income shall be left out of account in determining under those sub-paragraphs the part of the consideration for the disposal which represents income accrued to the date of the disposal.
### United Kingdom equivalent profits
##### 5
- (1) Any reference in this Schedule to the United Kingdom equivalent profits of an offshore fund for an account period is a reference to the amount which, on the assumptions in sub-paragraph (3) below, would be the total profits of the fund for that period on which, after allowing for any deductions available against those profits, corporation tax would be chargeable.
- (2) In this paragraph the expression " profits " does not include chargeable gains.
- (3) The assumptions referred to in sub-paragraph (1) above are—
- (a) that the offshore fund is a company which, in the account period in question, but not in any other account period, is resident in the United Kingdom ; and
- (b) that the account period is an accounting period of that company ; and
- (c) that any dividends or distributions which, by virtue of section 239 of the Taxes Act (dividends and distributions of companies resident in the United Kingdom), should be left out of account in computing income for corporation tax purposes are nevertheless to be brought into account in that computation in like manner as if they were dividends or distributions of a company resident outside the United Kingdom.
- (4) Without prejudice to any deductions available apart from this sub-paragraph, the deductions referred to in sub-paragraph (1) above include—
- (a) a deduction equal to any amount which, by virtue of paragraph 1(6) above, is allowed as a deduction in determining the income of the fund for the account period in question; and
- (b) a deduction equal to any amount of tax (paid under the law of a territory outside the United Kingdom) which was taken into account as a deduction in determining the income of the fund for the account period in question but which, because it is referable to capital rather than income, does not fall to be taken into account by virtue of section 516 of the Taxes Act.
- (5) For the avoidance of doubt it is hereby declared that, if any sums forming part of the offshore fund's income for any period have been received by the fund without any deduction of or charge to tax by virtue of section 99 or section 100 of the Taxes Act (securities held by non-residents), the effect of the assumption in sub-paragraph (3)(a) above is that those sums are to be brought into account in determining the total profits referred to in sub-paragraph (1) above.
## PART II — Modifications of Conditions For Certification in Certain Cases
### Exclusion of investments in distributing offshore funds
##### 6
- (1) In any case where—
- (a) in an account period of an offshore fund (in this Part of this Schedule referred to as the " primary fund"), the assets of the fund consist of or include interests in another offshore fund, and
- (b) those interests (together with other interests which the primary fund may have) are such that, by virtue of paragraph (a) of subsection (3) of section 95 of this Act or, if the other fund concerned is a company, by virtue of paragraph (b) or paragraph (c) of that subsection, the primary fund could not, apart from this paragraph, be certified as a distributing fund in respect of that account period, and
- (c) without regard to the provisions of this paragraph, that other fund could be certified as a distributing fund in respect of its account period or, as the case may be, each of its account periods which comprises the whole or any part of the account period of the primary fund,
then, in determining whether anything in paragraphs (a) to (c) of the said subsection (3) prevents the primary fund being certified as mentioned in paragraph (b) above, the interests of the primary fund in that other fund shall be left out of account except for the purpose of determining the total value of the assets of the primary fund.
- (2) In this Part of this Schedule an offshore fund falling within sub-paragraph (1)(c) above is referred to as a " qualifying fund".
- (3) In a ease falling within sub-paragraph (1) above—
- (a) paragraphs (a) to (c) of subsection (3) of section 95 of this Act shall have effect in relation to the primary fund with the modification in paragraph 7 below (in addition to that provided for by sub-paragraph (1) above); and
- (b) Part I of this Schedule shall have effect in relation to the primary fund with the modification in paragraph 8 below.
##### 7
The modification referred to in paragraph 6(3)(a) above is that, in any case where—
- (a) at any time in the account period referred to in paragraph 6(1) above, the assets of the primary fund include an interest in an offshore fund or in any company (whether an offshore fund or not), and
- (b) that interest falls to be taken into account in determining whether anything in paragraphs (a) to (c) of subsection (3) of section 95 of this Act prevents the primary fund being certified as a distributing fund in respect of that account period, and
- (c) at any time in that account period the assets of the qualifying fund include an interest in the offshore fund or company referred to in paragraph (a) above,
for the purpose of the application in relation to the primary fund of the provisions referred to in paragraph (b) above, at any time when the assets of the qualifying fund include the interest referred to in paragraph (c) above, the primary fund's share of that interest shall be treated as an additional asset of the primary fund.
##### 8
- (1) The modification referred to in paragraph 6(3)(b) above is that, in determining whether the condition in paragraph 1(1)(b)(ii) above is fulfilled with respect to the account period of the primary fund referred to in paragraph 6(1) above, the United Kingdom equivalent profits of the primary fund for that period shall be treated as increased by the primary fund's share of the excess income (if any) of the qualifying fund which is attributable to that period.
- (2) For the purposes of this paragraph, the excess income of the qualifying fund for any account period of that fund is the amount (if any) by which its United Kingdom equivalent profits for that account period exceed the amount of the distributions made for that period, as determined for the purposes of the application of paragraph 1(1) above to the qualifying fund.
- (3) If an account period of the qualifying fund coincides with an account period of the primary fund, then the excess income (if any) of the qualifying fund for that period is the excess income which is attributable to that period of the primary fund.
- (4) In a case where sub-paragraph (3) above does not apply, the excess income of the qualifying fund which is attributable to an account period of the primary fund is the appropriate fraction of the excess income (if any) of the qualifying fund for any of its account periods which comprises the whole or any part of the account period Of the primary fund and, if there is more than one such account period of the qualifying fund, the aggregate of the excess income (if any) of each of them.
- (5) For the purposes of sub-paragraph (4) above, the appropriate fraction is that of which—
- (a) the numerator is the number of days in the account period of the primary fund which are also days in an account period of the qualifying fund ; and
- (b) the denominator is the number of days in that account period of the qualifying fund or, as the case may be, in each of those account periods of that fund which comprises the whole or any part of the account period of the primary fund.
##### 9
- (1) The references in paragraphs 7 and 8(1) above to the primary fund's share of—
- (a) an interest forming part of the assets of the qualifying fund, or
- (b) the excess income (as defined in paragraph 8 above) of the qualifying fund,
shall be construed as references to the fraction specified in sub-paragraph (2) below of that interest or excess income.
- (2) In relation to any account period of the primary fund, the fraction referred to in sub-paragraph (1) above is that of which—
- (a) the numerator is the average value of the primary fund's holding of interests in the qualifying fund during that period; and
- (b) the denominator is the average value of all the interests in the qualifying fund held by any persons during that period.
### Offshore funds investing in trading companies
##### 10
- (1) In any case where the assets of an offshore fund for the time being include an interest in a trading company, as defined in sub-paragraph (2) below, the provisions of subsection (3) of section 95 of this Act nave effect subject to the modifications in sub-paragraphs (3) and (4) below.
- (2) In this paragraph " trading company " means a company whose business consists wholly of the carrying on of a trade or trades and does not to any extent consist of—
- (a) dealing in commodities, as defined in paragraph 4(2) above, or dealing, as so defined, in currency, securities, debts or other assets of a financial nature ; or
- (b) banking or money-lending.
- (3) In the application of section 95(3)(b) of this Act to so much of the assets of an offshore fund as for the time being consists of interests in a single trading company, for the words " 10 per cent. " there shall be substituted the words " 20 per cent. "
- (4) In the application of section 95(3)(c) of this Act to an offshore fund the assets of which for the time being include any issued share capital of a trading company or any class of that share capital, for the words " more than 10 per cent." there shall be substituted the words " 50 per cent. or more ".
### Offshore funds with wholly-owned subsidiaries dealing in commodities
##### 11
- (1) In relation to an offshore fund which has a wholly-owned subsidiary—
- (a) which is a company, and
- (b) the business of which consists wholly or mainly of dealing in commodities, as defined in paragraph 4(2) above,
the provisions of subsection (3) of section 95 of this Act and Part I of this Schedule have effect subject to the modifications in sub-paragraph (3) below.
- (2) For the purposes of this paragraph, a company is a wholly-owned subsidiary of an offshore fund if and so long as the whole of the issued share capital of the company is,—
- (a) in the case of an offshore fund falling within section 94(1)(a) of this Act, directly and beneficially owned by the fund ; and
- (b) in the case of an offshore fund falling within section 94(1)(b) of this Act, directly owned by the trustees of the fund for the benefit of the fund ; and
- (c) in the case of an offshore fund falling within section 94(1)(c) of this Act, owned in a manner which, as near as may be, corresponds either to paragraph (a) or paragraph (b) above.
- (3) The modifications referred to in sub-paragraph (1) above are that, for the purposes of the provisions referred to in that sub-paragraph,—
- (a) the receipts, expenditure, assets and liabilities of the subsidiary shall be regarded as the receipts, expenditure, assets and liabilities of the fund ; and
- (b) there shall be left out of account the interest of the fund in the subsidiary and any distributions or other payments made by the subsidiary to the fund or by the fund to the subsidiary.
### Offshore funds with interests in dealing and management companies
##### 12
- (1) Section 95(3)(c) of this Act shall not apply to so much of the assets of an offshore fund as consists of issued share capital of a company which is either—
- (a) a wholly-owned subsidiary of the fund which falls within sub-paragraph (2) below, or
- (b) a subsidiary management company of the fund, as defined in sub-paragraph (3) below.
- (2) A company which is a wholly-owned subsidiary of an offshore fund is one to which sub-paragraph (1)(a) above applies if—
- (a) the business of the company consists wholly of dealing in material interests in the offshore fund for the purposes of and in connection with the management and administration of the business of the fund ; and
- (b) the company is not entitled to any distribution in respect of any material interest for the time being held by it;
and paragraph 11(2) above shall apply to determine whether a company is, for the purposes of this paragraph, a wholly-owned subsidiary of an offshore fund.
- (3) A company in which an offshore fund has an interest is for the purposes of sub-paragraph (1)(b) above a subsidiary management company of the fund if—
- (a) the company carries on no business other than providing services falling within sub-paragraph (4) below either for the fund alone or for the fund and for any other offshore fund which has an interest in the company ; and
- (b) the company's remuneration for the services which it provides to the fund is not greater than it would be if it were determined at arm's length between the fund and a company in which the fund has no interest.
- (4) The services referred to in sub-paragraph (3) above are—
- (a) holding property (of any description) which is occupied or used in connection with the management or administration of the fund ; and
- (b) providing administrative, management and advisory services to the fund.
- (5) In determining, in accordance with sub-paragraph (3) above, whether a company in which an offshore fund has an interest is a subsidiary management company of that fund,—
- (a) every business carried on by a wholly-owned subsidiary of the company shall be treated as carried on by the Company ; and
- (b) no account shall be taken of so much of the company's business as Consists of holding its interests in a wholly-owned Subsidiary; and
- (c) any reference in sub-paragraph (3)(b) above to the company shall be taken to include a reference to a wholly-owned subsidiary of the company.
- (6) Any reference in sub-paragraph (5) above to a wholly-owned subsidiary of a company is a reference to another company the whole of the issued share capital of which is for the time being directly and beneficially owned by the first company.
## PART III — Certification Procedure
### Application for Certification
##### 13
- (1) The Board shall, in such manner as they think appropriate, certify an offshore fund as a distributing fund in respect of an account period if—
- (a) an application in respect of that period is made under this paragraph; and
- (b) the application is accompanied by the accounts of the fund for, or for a period which includes, the account period to which the application relates ; and
- (c) there is furnished to the Board such information as they may reasonably require for the purpose of determining whether the fund should be so certified ; and
- (d) they are satisfied that nothing in subsection (2) or subsection (3) of section 95 of this Act prevents the fund being so certified.
- (2) An application under this paragraph shall be made to the Board by the fund or by a trustee or officer thereof on behalf of the fund and may be so made—
- (a) before the expiry of the period of six months beginning at the end of the account period to which the application relates; or
- (b) if it is later, before 1st January 1985 ; or
- (c) at Such later time as the Board may in any particular case allow.
- (3) In any case where, on an application under this paragraph, the Board determine that the offshore fund concerned should not be certified as a dittoing fund in respect of the account period to which the application relates, they shall give notice in writing of that fact to the fund.
- (4) If at any time it appears to the Board that the accounts accompanying an application under this paragraph in respect of any account period of an offshore fund or any information furnished to the Board in connection with such an application is or are not such as to make full and accurate disclosure of all facts and considerations relevant to the application, they shall give notice to the fund accordingly, specifying the period concerned.
- (5) Where a notice is given by the Board under sub-paragraph (4) above, any certification by them in respect of the account period in question shall be void.
### Appeals
##### 14
- (1) An appeal to the Special Commissioners—
- (a) against such a determination as is referred to in paragraph 13(3) above, or
- (b) against a notification under paragraph 13(4) above,
may be made by the offshore fund or by a trustee or officer thereof on behalf of the fund, and shall be so made by notice in writing specifying the grounds of appeal and given to the Board within 90 days of the date of the notice under paragraph 13(3) or, as the ease may be, paragraph 13(4) above.
- (2) The jurisdiction of the Special Commissioners on an appeal under this paragraph shall include jurisdiction to review any decision of the Board which is relevant to a ground of the appeal.
## PART IV — Supplementary
### Assessment: effect of non-certification
##### 15
No appeal may be brought against an assessment to tax on the ground that an offshore fund should have been certified as a distributing fund in respect of an account period of the fund.
##### 16
- (1) Without prejudice to paragraph 15 above, in any case where no application has been made under paragraph 13 above in respect of an account period of an offshore fund, any person who is assessed to tax for which he would not be liable if the offshore fund were certified as a distributing fund in respect of that period may by notice in writing require the Board to take action under this paragraph with a view to determining whether the fund should be so certified.
- (2) Subject to sub-paragraphs (3) and (5) below, if the Board receive a notice under sub-paragraph (1) above, they shall, by notice in writing, invite the offshore fund concerned to make an application under paragraph 13 above in respect of the period in question.
- (3) Where sub-paragraph (2) above applies, the Board shall not be required to give notice under that sub-paragraph before the expiry of the account period to which the notice is to relate nor if an application under paragraph 13 above has already been made; but where notice is given under that sub-paragraph, an application under paragraph 13 above shall not be out of time under paragraph 13(2)(a) or paragraph 13(2)(b) above if it is made within 90 days of the date of that notice.
- (4) If an offshore fund to which notice in writing is given under sub-paragraph (2) above does not, within the time allowed by sub-paragraph (3) above or, as the case may be, paragraph 13(2)(a) or paragraph 13(2)(b) above, make an application under paragraph 13 above in respect of the account period in question, the Board shall proceed to determine the question of certification in respect of that period as if such an application had been made.
- (5) Where the Board receive more than one notice under sub-paragraph (1) above with respect to the same account period of the same offshore fund, their obligations under sub-paragraphs (2) and (4) above shall be taken to be fulfilled with respect to each of those notices if they are fulfilled with respect to any one of them.
- (6) Notwithstanding anything in sub-paragraph (5) above, for the purpose of a determination under sub-paragraph (4) above with respect to an account period of an offshore fund, the Board shall have regard to accounts and other information furnished by all persons who have given notice under sub-paragraph (1) above with respect to that account period ; and paragraph 13 above shall apply as if accounts and information so furnished had been furnished in compliance with sub-paragraph (1) of that paragraph.
- (7) Without prejudice to sub-paragraph (5) above, in any case where—
- (a) at a time after the Board have made a determination under sub-paragraph (4) above that an offshore fund should not be certified as a distributing fund in respect of an account period, notice is given under sub-paragraph (1) above with respect to that period, and
- (b) the person giving that notice furnishes the Board with accounts or information which had not been furnished to the Board at the time of the earlier determination,
the Board shall reconsider their previous determination in the light of the new accounts or information and, if they consider it appropriate, may determine to certify the fund accordingly.
- (8) Where any person has given notice to the Board under sub-paragraph (1) above with respect to an account period of an offshore fund and no application has been made under paragraph 13 above with respect to that period,—
- (a) the Board shall notify that person of their determination with respect to certification under sub-paragraph (4) above ; and
- (b) paragraph 14 above shall not apply in relation to that determination.
### Postponement of tax pending determination of question as to certification
##### 17
- (1) In any case where—
- (a) an application has been made under paragraph 13 above with respect to an account period of an offshore fund and that application has not been finally determined, or
- (b) paragraph (a) above does not apply but notice has been given under paragraph 16(1) above in respect of an account period of an offshore fund and the Board have not yet given notice of their decision as to certification under paragraph 16(4) above,
any person who has been assessed to tax and considers that, if the offshore fund were to be certified as a distributing fund in respect of the account period in question, he would be overcharged to tax by the assessment may, by notice in writing given to the inspector within 30 days after the date of the issue of the notice of assessment, apply to the General Commissioners for a determination of the amount of tax the payment of which should be postponed pending the determination of the question whether the fund should be so certified.
- (2) A notice of application under sub-paragraph (1) above shall state the amount in which the applicant believes that he is overcharged to tax and his grounds for that belief.
- (3) Subsections (3A) onwards of section 55 of the Taxes Management Act 1970 (recovery of tax not postponed) shall apply with any necessary modifications in relation to an application under sub-paragraph (1) above as if it were an application under subsection (3) of that section and as if the determination of the question as to certification (whether by the Board or on appeal) were the determination of an appeal.
### Information as to decisions on certification etc.
##### 18
No obligation as to the secrecy imposed by statute or otherwise shall preclude the Board or an inspector from disclosing to any person appearing to have an interest in the matter—
- (a) any determination of the Board or (on appeal) the Special Commissioners whether an offshore fund should or should not be certified as a distributing fund in respect of any account period; or
- (b) the content and effect of any notice given by the Board under paragraph 13(4) above.
## SCHEDULE 20
## PART I — Disposals of Interests in Non-Qualifying Funds
### Interpretation
##### 1
- (1) In this Schedule—
- "attributed gain", in relation to the beneficiary, means the chargeable gain which, as mentioned in paragraph (b) of subsection (1) of the principal section, is treated as accruing to him;
- "the beneficiary" means the beneficiary referred to in that paragraph and paragraph (c) of that subsection ;
- " claim " means a claim under paragraph 2(1) below ;
- " close relative ", in relation to any person, means his spouse or a child or remoter descendant of his ;
- "ineligible gain" shall be construed in accordance with paragraph 2(3) below;
- " offshore income gain " has the same meaning as in Chapter VII of Part II of this Act;
In this Part of this Schedule—
- " the principal Act" means the Capital Gains Tax Act 1979 ;
- " the principal section " means section 70 of this Act;
- " related settlement" shall be construed in accordance with paragraph 5(6) below;
- " relevant benefit" shall be construed in accordance with paragraph 5 below; and
- " the relevant year of assessment", in relation to an attributed gain, means the year of assessment in which the gain is treated as accruing to the beneficiary.
- (2) Subject to subsection (4) of the principal section, section 83 of the Finance Act 1981 (meaning of "capital payment" etc.) applies for the purposes of this Schedule as it applies for the purposes of sections 80 to 82 of that Act.
- (3) In any case where the beneficiary is a married woman, any reference in the following provisions of this Schedule to the payment of capital gains tax by the beneficiary shall be construed as including a reference to the payment by her husband of capital gains tax which, under subsection (1) of section 45 of the principal Act, is assessed and charged on him.
### Claims for postponement of tax
- " the principal section " means section 96 of this Act; and
- "material disposal" means a disposal to which Chapter VII of Part II of this Act applies, otherwise than by virtue of section 93(3) of this Act.
### Calculation of unindexed gain
##### 2
- (1) Subject to sub-paragraph (3) below, in a case falling within the principal section, the provisions of this Schedule have effect to determine whether, on a claim made to the Board, payment of any of the capital gains tax referable to an attributed gain may be postponed and, if so, to what extent and for how long.
- (2) A claim must be made before 1st July 1985 or, if it is later, the expiry of the period of thirty days beginning with the date of the issue of a notice of assessment requiring the payment of an amount of capital gains tax assessed, in whole or in part, by reason of an attributed gain to which the claim relates.
- (3) The provisions of this Schedule do not have effect to allow postponement of the payment of the capital gains tax referable to an attributed gain if the capital gains tax chargeable on the gain—
- (a) has previously been postponed under section 17(4)(b) of the principal Act (pre-6th April 1965 settlements); or
- (b) subject to sub-paragraph (4) below, carries interest, by virtue of section 88(1) of the Taxes Management Act 1970 (interest on tax recovered to make good tax lost due to fraud, wilful default or neglect), from the date on which the tax ought to have been paid until payment;
and an attributed gain falling within paragraph (a) or paragraph (b) above is in this Schedule referred to as an ineligible gain.
- (4) Sub-paragraph (3)(b) above does not apply where the tax carries interest by reason only of the neglect of any person and that neglect is remedied before 1st July 1985.
- (5) In relation to a claim, any reference in this Schedule to an attributed gain to which the claim relates is a reference to such a gain—
- (a) which is specified in the claim, and
- (b) which is not an ineligible gain, and
- (c) in respect of which the claim is not out of time by virtue of sub-paragraph (2) above,
and any reference to the settlement to which the claim relates is a reference to the settlement under which the beneficiary is a beneficiary and to the trustees of which accrued the chargeable gain which gives rise to the attributed gain or gains to which the claim relates.
- (6) In a case where a claim relates to attributed gains accruing to the beneficiary by virtue of more than one settlement, the provisions of this Schedule shall have effect as if there were separate claims, each relating to the attributed gain or gains accruing by virtue of a single settlement
- (7) Without prejudice to the application of sub-paragraph (2) above in a case where the personal representatives of the beneficiary receive a notice of assessment requiring the payment by them of an amount of capital gains tax assessed, in whole or in part, by reason of an attributed gain, if—
- (a) before his death the beneficiary or, where paragraph 1(3) above applies, the beneficiary's husband received a notice of assessment requiring the payment by him of such an amount of capital gains tax, and
- (b) at the time of his death the period within which he might make a claim in respect of any of the tax assessed by that notice had not expired,
a claim by his personal representatives relating to that tax may be made at any time before the expiry of the period of six months beginning on the date of the death of the beneficiary or, as the case may be, her husband (or, if it is later, before 1st July 1985).
- (8) In relation to any claim by the personal representatives of the beneficiary, references in this Schedule to the postponement of the payment of any tax shall be construed as references to the discharge of that tax and, accordingly, paragraphs 11 and 12 below do not apply where a claim is made by the personal representatives.
### Tax referable to attributed gains
- (1) Where there is a material disposal, there Shall first be determined for the purposes of this Part of this Schedule the amount (if any) which, in accordance with the provisions of this paragraph, is the unindexed gain accruing to the person making the disposal.
- (2) Subject to subsections (3) to (6) of section 92 of this Act and paragraph 3 below, the unindexed gain accruing on a material disposal is the amount which would be the gain on that disposal for the purposes of the principal Act if it were computed—
- (a) without regard to any charge to income tax or corporation tax by virtue of the principal section; and
- (b) without regard to any indexation allowance on the disposal under Chapter III of Part III of the Finance Act 1982.
##### 3
Any reference in this Schedule to the tax referable to an attributed gain is a reference to the amount determined by multiplying the total capital gains tax on chargeable gains accruing to the beneficiary in the relevant year of assessment by a fraction—
- (a) of which the numerator is the amount of the attributed gain; and
- (b) the denominator is the total of the chargeable gains accruing to the beneficiary in the relevant year of assessment.
### Initial calculations relevant to tax which may be postponed
- (1) if the amount of any chargeable gain or allowable loss which (apart from section 98 of this Act) would accrue on the material disposal would fall to be determined in a way which, in whole or in part, would take account of the indexation allowance on an earlier disposal to which paragraph 2 of Schedule 13 to the Finance Act 1982 applies (disposals on a no-gain/no-loss basis), the unindexed gain on the material disposal shall be computed as if—
- (a) no indexation allowance had been available on any such earlier disposal; and
- (b) subject to that, neither a gain nor a loss had accrued to the person making such an earlier disposal.
- (2) If the material disposal forms part of a transfer to which Section 123 of the principal Act applies (roll-over relief on transfer of business), the unindexed gain accruing on the disposal Shall be computed without regard to any deduction which falls to be made under that section in computing a chargeable gain.
- (3) If the material disposal is made otherwise than under a bar-gam at arm's length and a claim for relief is made in respect of that disposal under section 79 of the Finance Act 1980 (relief for gifts), that section shall not affect the computation of the unindexed gain accruing on the disposal.
- (4) Where, in the case of an insurance company carrying on life assurance business, a profit arising from general annuity business and attributable to a material disposal falls (or would but for section 99(2) of this Act fall) to be taken into account in the computation under section 312 of the Taxes Act (general annuity business and pension business: separate charge on profits), the unindexed gain, if any, accruing to the company on the disposal shall be computed as if section 31(1) of the principal Act (computation of chargeable gains: exclusion of sums taken into account in computing income) did not apply.
- (5) Notwithstanding section 29 of the principal Act (losses to be determined in like manner as gains) if, apart from this sub-paragraph, the effect of any computation under the preceding provisions of this Part of this Schedule would be to produce a loss, the unindexed gain on the material disposal shall be treated as nil; and, accordingly, for the purposes of this Part of this Schedule no loss shall be treated as accruing on a material disposal.
- (6) Section 323 of the Taxes Act (interpretation of Chapter II of Part XII of that Act) has effect in relation to sub-paragraph (4) above as if it were included in that Chapter.
### Gains since 1st January 1984
##### 4
- (1) Where a claim is made, the determination referred to in paragraph 2(1) above shall, in the first instance, be made (in accordance with paragraph 6 below) by reference to—
- (a) the amount defined in sub-paragraph (4) below as the unpaid tax;
- (b) the amount defined in sub-paragraph (5) below as the tax already paid; and
- (c) the aggregate value of any relevant benefits which, by virtue of paragraph 5 below, fall to be taken into account in relation to the claim.
- (2) Subject to sub-paragraph (3) below, in this paragraph and paragraph 5 below "the base year" means the year of assessment which precedes the relevant year of assessment in relation to the attributed gain or, as the case may be, the earliest of the attributed gains to which the claim relates.
- (3) Where the relevant year of assessment referred to in sub-paragraph (2) above is the year 1965-66, the base year is also that year of assessment.
- (4) In relation to a claim, " the unpaid tax " means the amount of tax—
- (a) which is referable to the attributed gain (or attributed gains) to which the claim relates; and
- (b) which remains unpaid at the date of the claim.
- (5) In relation to a claim, " the tax already paid" means the amount of tax—
- (a) which has been paid at the date of the claim, excluding any tax which was so paid, or is or was otherwise borne, by the trustees of the settlement to which the claim relates; and
- (b) which is referable to any attributed gains—
- (i) which have accrued to the beneficiary by virtue of the settlement to which the claim relates; and
- (ii) for which the relevant year of assessment is, or is later than, the base year ; and
- (iii) which are not ineligible gains.
### Relevant benefits
- (1) This paragraph applies where—
- (a) the interest in the offshore fund which is disposed of by the person making a material disposal was acquired by him before 1st January 1984 ; or
- (b) he is treated by virtue of any provisions of sub-paragraphs (3) and (4) below as having acquired the interest before that date.
- (2) Where this paragraph applies, there shall be determined for the purposes of this Part of this Schedule the amount which would have been the gain on the material disposals—
- (a) on the assumption that, on 1st January 1984, the interest was disposed of and immediately reacquired for a consideration equal to its market value at that time ; and
- (b) subject to that, on the basis that the gain is computed In like manner as, under paragraphs 2 and 3 above, the unindexed gain on the material disposal is determined ;
and that amount is in paragraph 5 below referred to as the " post'. 1983 gain " on the material disposal.
- (3) Where the person making the material disposal acquired the interest disposed of on or after 1st January 1984 and in such circumstances that, by virtue of any enactment other than section 86(5) of or Schedule 13 to the Finance Act 1982 (indexation provisions), he and the person from whom he acquired it (in this sub-paragraph and sub-paragraph (4) below referred to as " the previous owner ") fell to be treated for the purposes of the principal Act as if his acquisition were for a consideration of such an amount as would secure that, on the disposal under which he acquired it, neither a gain nor a loss accrued to the previous owner, the previous owner's acquisition of the interest shall be treated as his acquisition of it.
- (4) If the previous owner acquired the interest disposed of on or after 1st January 1984 and in circumstances similar to those referred to in sub-paragraph (3) above, his predecessor's acquisition of the interest shall be treated for the purposes of this paragraph as the previous owner's acquisition, and so on back through previous acquisitions in similar circumstances until the first such acquisition before 1st January 1984 or, as the case may be, until an acquisition on a material disposal on or after that date.
### The offshore income gain
##### 5
- (1) The provisions of this paragraph have effect to determine what are the relevant benefits to be taken into account (as mentioned in paragraph 4(1)(c) above) in relation to a claim; and in the following provisions of this paragraph "the calculation period" means the period beginning at the beginning of the base year and ending on 9th March 1981.
- (2) Subject to sub-paragraph (3) below, if, under or by reference to the settlement to which the claim relates or a related settlement, the beneficiary received a capital payment from the trustees of the settlement—
- (a) at any time in the calculation period, or
- (b) after the end of that period but before 6th April 1984, in so far as that payment represented a chargeable gain which, before 6th April 1981, accrued to the trustees of the settlement to which the claim relates,
the amount of that capital payment is a relevant benefit.
- (3) In any case where, apart from this sub-paragraph, sub-paragraph (2) above would bring into account, as a relevant benefit in relation to a claim, a capital payment received under or by reference to a related settlement, and either—
- (a) on a claim relating to the related settlement, the payment falls to be taken into account under this paragraph as a relevant benefit, or
- (b) it appears to the Board to be likely that the payment will fall to be so taken into account on a claim relating to the related settlement,
the payment shall not be taken into account as a relevant benefit in relation to the claim referred to in sub-paragraph (2) above except to the extent that it constitutes a surplus benefit by virtue of paragraph 6(5) below.
- (4) If, at any time in the period beginning at the beginning of the base year and ending at the beginning of the year of assessment in which the claim is made, the beneficiary disposed of his interest in the settlement to which the claim relates in circumstances such that, by virtue of section 58(1) of the principal Act, no chargeable gain could accrue on the disposal, then the amount or value of the consideration for the disposal is a relevant benefit.
- (5) Where the disposal referred to in sub-paragraph (4) above was made before 6th April 1984, the reference in that sub-paragraph to the consideration for the disposal shall be construed as a reference only to such consideration (if any) as was actually given for the disposal.
- (6) For the purposes of this Schedule, a settlement is a related settlement in relation to the settlement to which a claim relates if, by the exercise in the base year or later (whether before or after the making of the claim) of a power conferred by one of the settlements, or by the combination of such an exercise and any other transactions, property of any description forming part of the settled property of one of the settlements is at any time appointed to the other settlement or otherwise dealt with so as to increase the value of the settled property of the other settlement.
### The basic rules as to postponement
- (1) Subject to sub-paragraph (2) below, a material disposal gives rise to an offshore income gain of an amount equal to the unindexed gain on that disposal.
- (2) In any case where—
- (a) paragraph 4 above applies, and
- (b) the post-1983 gain on the material disposal is less than the unindexed gain on the disposal,
the offshore income gain to which the disposal gives rise is an amount equal to the post-1983 gain.
## PART II — Disposals Involving an Equalisation Element
##### 6
- (1) Unless on a claim the aggregate of—
- (a) the unpaid tax (as defined in paragraph 4(4) above), and
- (b) the tax already paid (as defined in paragraph 4(5) above),
exceeds 30 per cent. of the aggregate of the relevant benefits referred to in paragraph 4(1)(c) above, there is no postponement of the payment of any of the capital gains tax referable to the attributed gains to which the claim relates.
- (2) Subject to the following provisions of this Schedule, the amount of capital gains tax payment of which is, on a claim, postponed by virtue of this Schedule is whichever is the smaller of—
- (a) the unpaid tax ; and
- (b) the amount of the excess referred to in sub-paragraph (1) above;
and, where the amount in paragraph (b) above is the smaller, payment of tax assessed for a later year shall be postponed in priority to payment of tax assessed for an earlier year.
- (3) Without prejudice to paragraph 2(8) above, if at any time after a claim is made the beneficiary dies, any tax the payment of which would, by virtue of this Schedule, still be postponed at the date of his death shall be discharged on that date.
- (4) Notwithstanding anything in Part IX of the Taxes Management Act 1970 (interest on overdue tax), where payment of an amount of capital gains tax is postponed by virtue of this Schedule none of that tax shall carry interest (or be taken to have carried interest) for any period before the time when the tax becomes payable in accordance with paragraph 11 below.
- (5) In any case where, by virtue of sub-paragraph (1) above, there is on a claim no postponement of the payment of capital gains tax, there shall be determined—
- (a) whether there would still be no postponement if there were left out of account all relevant benefits (if any) referable to capital payments received under or by reference to a related settlement, and
- (b) if so, what is the excess of all the other relevant benefits over 3 1/3 times the aggregate of the tax referred to in paragraphs (a) and (b) of sub-paragraph (1) above,
and so much of those other relevant benefits as are referable to capital payments falling within sub-paragraph (2) of paragraph 5 above and equal (or do not exceed) that excess shall be regarded as a surplus benefit for the purposes of sub-paragraph (3) of that paragraph.
### Effect of subsequent capital payments received by the beneficiary
- (1) Subject to paragraph 7 below, a disposal to which Chapter VII of Part II of this Act applies by virtue of section 93(3) of this Act gives rise to an offshore income gain of an amount equal to the equalisation element relevant to the asset disposed of.
- (2) Subject to sub-paragraphs (4) to (6) below, the equalisation element relevant to the asset disposed of by a disposal falling within sub-paragraph (1) above is the amount which would be credited to the equalisation account of the offshore fund concerned in respect of accrued income if, on the date of the disposal, the asset which is disposed of were acquired by another person by way of initial purchase.
- (3) In the following provisions of this Part of this Schedule, a disposal falling within sub-paragraph (1) above is referred to as a " disposal involving an equalisation element".
- (4) Where the asset disposed of by a disposal involving an equalisation element was acquired by the person making the disposal after the beginning of the period by reference to which the accrued income referred to in sub-paragraph (2) above is calculated, the amount which, apart from this sub-paragraph, would be the equalisation element relevant to that asset shall be reduced by the following amount, that is to say,—
- (a) if that acquisition took place on or after 1st January 1984, the amount which, on that acquisition, was credited to the equalisation account of the offshore fund concerned in respect of accrued income or, as the case may be, would have been so credited if that acquisition had been by way of initial purchase ; and
- (b) in any other case, the amount which would have been credited to that account in respect of accrued income if that acquisition had been an acquisition by way of initial purchase taking place on 1st January 1984.
- (5) In any case where—
- (a) the asset disposed of by a disposal involving an equalisation element was acquired by the person making the disposal at or before the beginning of the period by reference to which the accrued income referred to in sub-paragraph (2) above is calculated, and
- (b) that period began before 1st January 1984 and ends after that date,
the amount which, apart from this sub-paragraph, would be the equalisation element relevant to that asset shall be reduced by the amount which would have been credited to the equalisation account of the offshore fund concerned in respect of accrued income if the acquisition referred to in paragraph (a) above had been an acquisition by way of inital purchase taking place on 1st January 1984.
- (6) Where there is a disposal involving an equalisation element, then, to the extent that any amount which was or would be credited to the equalisation account of the offshore fund in respect of accrued income, as mentioned in any of sub-paragraphs (2) to (5) above, represents profits from dealing in commodities, within the meaning of paragraph 4 of Schedule 19 to this Act, one half of that accrued income shall be left out of account in determining under those sub-paragraphs the equalisation element relevant to the asset disposed of by that disposal.
##### 7
- (1) The provisions of this paragraph apply if—
- (a) on a claim there would, in accordance with paragraph 6(2) above, be an amount of capital gains tax payment of which is postponed by virtue of this Schedule ; but
- (b) before the beginning of the year of assessment in which the claim is made, the beneficiary has received from the trustees of the settlement to which the claim relates or a related settlement a capital payment which is not a relevant benefit and has not been brought into account under subsections (3) and (4) of section 80 of the Finance Act 1981 (new provisions as to gains of non-resident settlements) in determining whether chargeable gains or offshore income gains should be attributed to the beneficiary by reference to any trust gains for any previous year of assessment.
- (2) If the amount of capital gains tax referred to in paragraph (a) of sub-paragraph (1) above exceeds 30 per cent. of the aggregate of the amount of the capital payments which fall within paragraph (b) of that sub-paragraph, then, subject to paragraph 9 below, the amount of capital gains tax payment of which is postponed by virtue of tins Schedule is an amount equal to that excess.
- (3) If the amount of capital gains tax referred to in paragraph (a) of sub-paragraph (1) above is less than or equal to 30 per cent. of the aggregate of the amount of the capital payments which fall within paragraph (b) of that sub-paragraph, then there is no postponement of the payment of any of that capital gains tax.
- (4) In any case where—
- (a) the amount of capital gains tax referred to in sub-paragraph (1)(a) above equals or exceeds 30 per cent. of the aggregate of those capital payments falling within sub-paragraph (1)(b) above which the beneficiary has received from the trustees of the settlement to which the claim relates, and
- (b) apart from this paragraph, those capital payments would fall to be brought into account under subsections (3) and (4) of section 80 of the Finance Act 1981 (new provisions as to gains of non-resident settlements) in determining whether chargeable gains or offshore income gains should be attributed to the beneficiary by reference to any trust gains for the year of assessment in which the claim is made,
then, as respects that year of assessment and any subsequent year, those capital payments shall be left out of account for the purposes of the said subsections (3) and (4).
- (5) In any case where—
- (a) the condition in sub-paragraph (4)(a) above is not fulfilled, but
- (b) the condition in sub-paragraph (4)(b) above is fulfilled,
then, as respects the year of assessment in which the claim is made and any subsequent year, so much of the capital payments referred to in sub-paragraph (4) above as is equal to times the amount of capital gains tax referred to in sub-paragraph (1)(a) above shall be left out of account for the purposes of subsections (3) and (4) of section 80 of the Finance Act 1981.
- (6) Where, by virtue of sub-paragraph (4) or sub-paragraph (5) above, the whole or any part of a capital payment falls to be left out of account as mentioned in that sub-paragraph,—
- (a) the payment shall to the same extent be left out of account for the purposes of the application on any other occasion of any provision of paragraphs 7 to 12 of this Schedule ; and
- (b) section 45 of the Finance Act 1981 (transfer of assets abroad: liability of non-transferors) shall have effect in relation to a benefit received by the beneficiary which, in whole or in part, consists of that payment as if, in the year of assessment in which the claim is made, chargeable gains equal to so much of that payment as falls to be so left out of account were, by reason of that payment, treated under section 80 of that Act as accruing to the beneficiary.
- (7) Where any capital payments falling within sub-paragraph (1)(b) above which the beneficiary has received from the trustees of the settlement to which the claim relates are not such as are referred to in sub-paragraph (4)(b) above, sub-paragraph (6)(a) above shall apply to each of those payments in like manner as if it had been such a payment as is referred to in sub-paragraph (4)(b) above and the amount of it to be left out of account had been determined accordingly under sub-paragraph (4) or sub-paragraph (5) above.
- (1) For the purposes of this Part of this Schedule, there shall be determined, in accordance with paragraph 8 below, the Part I gain (if any) on any disposal involving an equalisation element.
- (2) Notwithstanding anything in paragraph 6 above,—
- (a) if there is no Part I gain on a disposal involving an equalisation element, that disposal shall not give rise to an offshore income gain ; and
- (b) if, apart from this paragraph, the offshore income gain on a disposal involving an equalisation element would exceed the Part I gain on that disposal, the offshore income gain to which that disposal gives rise shall be reduced to an amount equal to that Part I gain.
##### 8
- (1) The provisions of this paragraph apply if, in a case where paragraph 7 above applies, the amount of capital gains tax referred to in sub-paragraph (1)(a) of that paragraph exceeds 30 per cent. of the aggregate of those capital payments falling within sub-paragraph (1)(b) of that paragraph which the beneficiary has received from the trustees of the settlement to which the claim relates.
- (2) In the following provisions of this paragraph—
- (a) the capital payments falling within sub-paragraph (1)(b) of paragraph 7 above which the beneficiary has received otherwise than from the trustees of the settlement to which the claim relates are referred to as " related payments " ; and
- (b) any of those related payments which, apart from this paragraph, would fall to be brought into account as mentioned in sub-paragraph (4)(b) of paragraph 7 above is referred to as a " related section 80 payment".
- (3) If sub-paragraph (2) of paragraph 7 above applies, then—
- (a) as respects the year of assessment in which the claim is made and any subsequent year, any related section 80 payment shall be left out of account for the purposes of sub-paragraphs (3) and (4) of section 80 of the Finance Act 1981 ; and
- (b) all the related payments shall be left out of account for the purposes of the application on any other occasion of any provision of paragraphs 7 to 12 of this Schedule.
- (4) If sub-paragraph (3) of paragraph 7 above applies, then—
- (a) as respects the year of assessment in which the claim is made and any subsequent year, so much of any related section 80 payment as is equal to 3J times the amount of capital gains tax released by that payment shall be left out of account for the purposes of subsections (3) and (4) of section 80 of the Finance Act 1981 ; and
- (b) so much of each of the related payments as is equal to 3J times the amount of capital gains tax released by the payment shall be left out of account for the purposes mentioned in sub-paragraph (3)(b) above.
- (5) For the purposes of sub-paragraph (4) above, the amount of capital gains tax released by a related payment shall be determined by the formula—
$$(A−B)×CD$ where— " A " is the capital gains tax referred to in sub-paragraph (1)(a) of paragraph 7 above ; " B " is an amount equal to 30 per cent. of the aggregate of those capital payments falling within sub-paragraph (1)(b) of that paragraph which the beneficiary has received from the trustees of the settlement to which the claim relates ; " C " is the related payment in question ; and " D " is the aggregate of all the related payments.$
- (6) Where, by virtue of sub-paragraph (3)(a) or sub-paragraph (4)(a) above, the whole or any part of a related section 80 payment falls to be left out of account as mentioned in that sub-paragraph, section 45 of the Finance Act 1981 shall have effect in relation to the benefit received by the beneficiary which, in whole or in part, consists of that payment as if, in the year of assessment in which the claim is made, chargeable gains equal to so much of that payment as falls to be so left out of account were, by reason of that payment, treated under section 80 of that Act as accruing to the beneficiary.
### Effect of related benefits derived from payments received by close relatives of the beneficiary
##### 9
- (1) The provisions of this paragraph apply if,—
- (a) on a claim, payment of an amount of capital gains tax determined in accordance with paragraph 6(2) or paragraph 7(2) above would, apart from this paragraph, be postponed by virtue of this Schedule ; and
- (b) as a result of a capital payment received by a close relative of the beneficiary, there is, in accordance with paragraph 10 below, a related benefit which falls to be taken into account in relation to the claim.
- (2) If the amount of capital gains tax referred to in sub-paragraph (1)(a) above exceeds 30 per cent. of the aggregate of the related benefits which fall to be taken into account in relation to the claim, then the amount of capital gains tax payment of which is postponed by virtue of this Schedule is an amount equal to that excess.
- (3) If the amount of capital gains tax referred to in sub-paragraph (1)(a) above is less than or equal to 30 per cent. of the aggregate of the related benefits which fall to be taken into account in relation to the claim, then there is no postponement of the payment of any of that capital gains tax.
### Related benefits
##### 10
- (1) The provisions of this paragraph have effect to determine what are, in relation to a claim, the related benefits which are to be taken into account under paragraph 9 above.
- (2) If, on or after 6th April 1984 and before the beginning of the year of assessment in which the claim is made, a close relative of the beneficiary has received from the trustees of the settlement to which the claim relates or a related settlement a capital payment which has not been brought into account under subsections (3) and (4) of section 80 of the Finance Act 1981 in determining whether chargeable gains or offshore income gains should be attributed to the close relative by reference to any trust gains for any previous year of assessment, then, subject to sub-paragraphs (3) and (4) below, that capital payment is a related benefit which falls to be taken into account in relation to the claim.
- (3) A capital payment falling within sub-paragraph (2) above is not a related benefit which falls to be taken into account as mentioned in that sub-paragraph to the extent that it has already been taken into account on any previous operation of sub-paragraph (4) or sub-paragraph (5) of paragraph 7 above on the occasion of a claim in respect of which the close relative himself or a close relative of his or a person whose close relative he is was the beneficiary.
- (4) A capital payment falling within sub-paragraph (2) above is not a related benefit which falls to be taken into account as mentioned in that sub-paragraph if the Board so direct on the grounds that it appears likely that the payment will fall to be taken into account, either as giving rise to a relevant benefit or under paragraph 7 above, in relation to such a claim as is referred to in sub-paragraph (3) above.
- (5) Sub-paragraphs (3) to (6) of paragraph 8 above shall have effect for the purposes of this paragraph—
- (a) as if any reference to a provision of paragraph 7 above were a reference to the corresponding provision of paragraph 9 above ; and
- (b) as if any reference to a related payment were a reference to a related benefit which falls to be taken into account as mentioned in sub-paragraph (2) above ; and
- (c) as if any reference to a related section 80 payment were a reference to a related benefit which falls to be taken into account as mentioned in sub-paragraph (2) above and which, apart from this paragraph, would fall to be taken into account under sub-paragraphs (3) and (4) of section 80 of the Finance Act 1981 in determining whether chargeable gains or offshore income gains should be attributed to the close relative concerned by reference to any trust gains for the year of assessment in which is made the claim referred to in sub-paragraph (2) above ; and
- (d) as if " B " in the formula in sub-paragraph (5) were nil; and
- (e) as if any reference in sub-paragraph (6) to the beneficiary were a reference to the close relative concerned.
### Time when postponed tax becomes payable
##### 11
- (1) The provisions of this paragraph apply where, as a result of a claim, payment of an amount of capital gains tax, determined in accordance with paragraphs 6 to 9 above, is postponed by virtue of this Schedule ; and, subject to sub-paragraph (6) below, any reference in the following provisions of this paragraph to postponed tax is a reference to tax the payment of which is so postponed.
- (2) Postponed tax shall become payable in accordance with sub-paragraph (5) below if, at any time in the year of assessment in which the claim is made or any later year, the beneficiary disposes of his interest in the settlement to which the claim relates in circumstances such that, by virtue of section 58(1) of the principal Act, no chargeable gain could accrue on the disposal; and in sub-paragraph (5) below " the relevant consideration " means the amount or value of the consideration for such a disposal.
- (3) Subject to paragraph 12 below, postponed tax shall become payable in accordance with sub-paragraph (5) below if, in the year of assessment in which the claim is made or any later year, the beneficiary or a close relative of his receives a capital payment from the trustees of the settlement to which the claim relates or a related settlement.
- (4) In the following provisions of this paragraph and paragraph 12 below, any reference to a material year of assessment is a reference to one in which the beneficiary disposes of his interest as mentioned in sub-paragraph (2) above or in which sub-paragraph (3) above applies.
- (5) For any material year of assessment, so much of the postponed tax as does not exceed 30 per cent. of the aggregate of—
- (a) the relevant consideration in respect of any disposal in that year, and
- (b) subject to paragraph 12 below, the capital payments received in that year as mentioned in sub-paragraph (3) above,
shall become payable as if it were capital gains tax assessed in respect of gains accruing in that year.
- (6) If, for any material year of assessment, the amount of the postponed tax exceeds 30 per cent. of the aggregate referred to in sub-paragraph (5) above, only the excess shall continue after the end of that year to be postponed tax for the purposes of this paragraph, but without prejudice to the subsequent operation of this paragraph in relation to a later year of assessment which is a material year.
- (7) Where part, but not the whole, of any postponed tax becomes payable in accordance with sub-paragraph (5) above, tax assessed for an earlier year shall be regarded as becoming so payable before tax assessed for a later year.
### Balance of capital payments
##### 12
- (1) If any capital payments received in any year of assessment as mentioned in paragraph 11(3) above fall to be brought into account for that year for the purposes of subsections (3) and (4) of section 80 of the Finance Act 1981, those capital payments shall be disregarded for the purposes of sub-paragraph (5) or, as the case may be, sub-paragraph (6) of paragraph 11 above except to the extent that the aggregate of those payments exceeds the chargeable gains and offshore income gains which in that year are treated under the said section 80 as accruing to the beneficiary or, as the case may be, the close relative ; and any such excess is in the following provisions of this paragraph referred to as the balance of section 80 payments for that year.
- (2) Subject to the following provisions of this paragraph, as respects any year of assessment subsequent to a material year of assessment for which there is a balance of section 80 payments there shall be left out of account for the purposes of subsections (3) and (4) of section 80 of the Finance Act 1981 so much of the capital payments as made up that balance.
- (3) If paragraph 11(6) above did not apply for any material year of assessment for which there is a balance of section 80 payments then, as respects years of assessment subsequent to that year, sub-paragraph (2) above shall apply only to so much of the capital payments mentioned therein as is equal to 3J times the amount of postponed tax released by that balance.
- (4) For any material year of assessment, the amount of postponed tax released by a balance of section 80 payments for that year shall be determined by the formula:—
$$(E−F)×GH$ where "E" is the postponed tax, within the meaning of paragraph 11 above ; "F" is an amount equal to 30 per cent. of any consideration for that year which falls within sub-paragraph (5)(a) of that paragraph ; "G" is the balance of the section 80 payments for that year ; and "H" is the aggregate of the capital payments (including that balance) taken into account under sub-paragraph (5)(b) of that paragraph for that year.$
- (5) If, in a case where sub-paragraph (2) above applies in accordance with sub-paragraph (3) above, there were, for the material year of assessment concerned,—
- (a) a balance of section 80 payments derived from payments received by the beneficiary, and
- (b) another such balance derived from payments received by a close relative of his,
sub-paragraph (2) above shall apply (in accordance with sub-paragraph (3) above) to the capital payments which made up the balance derived from payments received by the beneficiary in priority to Capital payments which made up the other balance.
- (6) Subject to sub-paragraph (5) above, where there is more than one capital payment to which sub-paragraph (2) above applies, the proportion of each of them which is left out of account as mentioned in that sub-paragraph shall be the same.
- (7) Where, by virtue of the preceding provisions of this paragraph, the whole or any part of a capital payment falls to be left out of account as mentioned in sub-paragraph (2) above, section 45 of the Finance Act 1981 shall have effect in relation to a benefit which is received by the beneficiary or, as the case may be, a close relative of his and which, in whole or in part, consists of that payment as if, in the material year of assessment concerned, chargeable gains equal to so much of that payment as falls to be so left out of account were, by reason of that payment, treated under section 80 of that Act as accruing to the beneficiary or, as the case may be, the close relative.
##### 13
- (1) Where, by virtue of sub-paragraph (2) of paragraph 12 above, the whole or any part of a capital payment falls to be left out of account as mentioned in that sub-paragraph, it shall to the same extent be left out of account for the purposes of the application on any other occasion of any provision of paragraphs 7 to 12 of this Schedule.
- (2) Where sub-paragraph (6) of paragraph 11 above applies for any material year of assessment, any capital payments which—
- (a) fall to be taken into account under sub-paragraph (5)(b) of that paragraph for that year, and
- (b) are not such as to fall within paragraph 12(1) above,
shall be left out of account for the purposes referred to in sub-paragraph (1) above.
- (3) Where sub-paragraph (6) of paragraph 11 above does not apply for any material year of assessment, so much of any capital payment falling within paragraphs (a) and (b) of sub-paragraph (2) above as is equal to 3 1/3 times the amount of postponed tax released by that payment shall be left out of account for the purposes referred to in sub-paragraph (1) above.
- (4) The amount of postponed tax released by a capital payment shall be determined for the purposes of sub-paragraph (3) above by the formula in paragraph 12(4) above, except that, in applying that formula for those purposes, " G " shall be the amount of the capital payment in question.
- (5) In this paragraph, " material year of assessment" shall be construed in accordance with paragraph 11(4) above.
### Second and later claims
##### 14
- (1) This paragraph applies where—
- (a) as a result of a claim (in this paragraph referred to as " the earlier claim "), payment of an amount of capital gains tax (in this paragraph referred to as " the original tax "), determined in accordance with paragraph 6 or paragraph 7 above, is or was postponed by virtue of this Schedule ; and
- (b) after the making of the earlier claim, another claim (in this paragraph referred to as " the later claim ") is made in relation to an attributed gain to which the earlier claim did not relate; and
- (c) the settlement to which the earlier and the later claims relate is the same.
- (2) If the year of assessment which is the relevant year of assessment in relation to any attributed gain to which the later claim relates is earlier than the earliest year of assessment which is the relevant year of assessment in relation to any attributed gain to which the earlier claim related, then,—
- (a) the earlier claim and the postponement resulting from it shall be set aside ; and
- (b) the provisions of this Schedule shall have effect as if (notwithstanding paragraph 2(2) above) the attributed gains to which the later claim relates included the attributed gains to which the earlier claim related.
- (3) Where sub-paragraph (2) above does not apply and, at the time the later claim is made, payment of any of the original tax remains postponed by virtue of this Schedule, then, subject to sub-paragraph (4) below,—
- (a) paragraphs 4 to 10 above shall not apply in relation to the later claim ; and
- (b) payment of the tax referable to the attributed gain or gains to which the later claim relates shall be postponed by virtue of this Schedule ; and
- (c) paragraphs 11 and 12 above shall apply as if the payment of that tax had been postponed as a result of the earlier claim and, accordingly, that tax shall be added to the original tax.
- (4) If, in a case where sub-paragraph (3) above applies, the relevant year of assessment in relation to an attributed gain (in this sub-paragraph referred to as "the later gain") to which the later claim relates is the same as the relevant year of assessment in relation to an attributed gain to which the earlier claim related,—
- (a) paragraph 3 above shall not apply in relation to the later gain ; and
- (b) in relation to the later gain, the references in sub-paragraph (3) above to the tax referable to the gain shall be construed as references to the capital gains tax assessed by reason of the gain.
- (5) Where sub-paragraph (2) above does not apply and, at the time the later claim is made, there is no longer any postponement of the payment of any of the original tax, then, in the application of the provisions of this Schedule in relation to the later claim, paragraph 4(2) above shall not apply and " the base year " for the purposes of paragraphs 4 and 5 above shall be that year of assessment which was the base year in relation to the earlier claim.
### Information
##### 15
- (1) The Board may by notice in writing require any person to furnish them, within such time as they may direct, not being less than twenty-eight days, with such particulars as they think necessary for the purposes of section 70 of this Act and this Schedule.
- (2) Subsections (2) to (5) of section 481 of the Taxes Act shall have effect in relation to sub-paragraph (1) above as they have effect in relation to subsection (1) of that section ; but, in the application of those subsections by virtue of this sub-paragraph, references to Chapter III of Part XVII of the Taxes Act shall be construed as references to section 70 of this Act and this Schedule.
- (3) In any case where—
- (a) a claim has been made, and
- (b) as a result of the claim, payment of an amount of capital gains tax was postponed by virtue of this Schedule, and
- (c) at a time when any of that tax remains unpaid, there is a disposal to which paragraph 11(2) above applies or the beneficiary or a close relative of his receives such a capital payment as is referred to in paragraph 11(3) above,
then, not later than three months after the end of the year of assessment in which the disposal occurs or the payment is received, the beneficiary shall inform the Board of the disposal or receipt, as the case may be.
- (4) The Table in section 98 of the Taxes Management Act 1970 (penalties for failure to comply with notices, furnish information etc.) shall be amended as follows—
- (a) at the end of the first column there shall be inserted—
| Paragraph 15(1) of Schedule 14 to the Finance Act 1984 |
| --- |
; and
- (b) at the end of the second column there shall be inserted—
| Paragraph 15(3) of Schedule 14 to the Finance Act 1984 |
| --- |
.
### Consequential relief from C.T.T
##### 16
In any case where—
- (a) payment of an amount of capital gains tax is postponed by virtue of this Schedule, and
- (b) any of that tax becomes payable in accordance with paragraph 11 above by reason of the receipt of a capital payment by a close relative of the beneficiary, as mentioned in sub-paragraph (3) of that paragraph, and
- (c) all or part of the tax becoming so payable is paid by the close relative,
the payment by the close relative shall be treated for the purposes of capital transfer tax as made in satisfaction of a liability of his.
## SCHEDULE 15
## PART I — Paragraph to be Inserted in Part I of Schedule 2 To Finance Act 1975
## PART II — Modifications of Provisions Relating to Qualifying Policies
- (1) On a disposal involving an equalisation element, the Part I gain is the amount (if any) which, by virtue of Part I of this Schedule (as modified by the following provisions of this paragraph), would be the offshore income gain on that disposal if it were a material disposal within the meaning of that Part.
- (2) For the purposes only of the application of Part I of this Schedule to determine the Part I gain (if any) on a disposal involving an equalisation element, subsections (5) and (6) of section 93 of this Act shall have effect as if, in subsection (5), the words " by virtue of subsection (3) above " were omitted,
- (3) If a disposal involving an equalisation element is one which, by virtue of any enactment other than section 86(5)(b) of or Schedule 13 to the Finance Act 1982 (indexation), is treated tor the purposes of the Capital Gains Tax Act 1979 as one on which neither a gain nor a loss accrues to the person making the disposal, then, for the purpose only of determining the Part I gain (if any) on the disposal, that enactment shall be deemed not to apply to it (but without prejudice to the application of that enactment to any earlier disposal).
- (4) In any case where a disposal involving an equalisation element is made by a company which has made an election under Schedule 6 to the Finance Act 1983 (indexation: election for pooling) and the asset disposed of consists of or includes securities which, by virtue of paragraph 3(3) of that Schedule, are to be regarded for the purposes of the principal Act as a single asset or part of a single asset, then, for the purpose only of determining the Part I gain (if any) on the disposal,—
- (a) the reference in paragraph 2(2)(b) above to an indexation allowance under Chapter III of Part III of the Finance Act 1982 shall be construed as including a reference to an indexation allowance under Schedule 6 to the Finance Act 1983; and
- (b) if some of the securities comprised in the asset disposed of were acquired by the company making the disposal before 1st January 1984 and some were not, paragraph 4(2) above shall not apply and paragraph 5 above shall have effect with the omission of sub-paragraph (2) (and the reference to that sub-paragraph in sub-paragraph (1)).
- (5) The reference in sub-paragraph (4)(b) above to securities acquired before 1st January 1984 includes a reference to securities which, by virtue of any provisions of paragraph 4 above, are treated as so acquired.
## SCHEDULE 21
### The Finance Act 1975
##### 1
In this Part of this Schedule—
- " Schedule 1 " means Schedule 1 to the Taxes Act (qualifying conditions etc.);
- " Schedule 2 " means Schedule 2 to the Finance Act 1975 (certification of qualifying policies etc.) ; and
- " the old policy" and " the new policy " have the same meaning as in paragraph 9 of Schedule 1.
##### 2
- (1) In the application of paragraph 9 of Schedule 1 (substitutions) in any case where—
- (a) the old policy was issued in respect of an insurance made after 17th November 1983 and could not be a qualifying policy by virtue of paragraph 1A of Schedule 2, and
- (b) the new policy is not a new non-resident policy, as defined in the said paragraph 1A,
the rules for the determination of the question whether the new policy is a qualifying policy shall apply with the modifications in sub-paragraph (2) below.
- (2) The modifications referred to in sub-paragraph (1) above are as follows:—
- (a) if, apart from paragraph 1A of Schedule 2, the old policy and any related policy (within the meaning of sub-paragraph (2)(b) of paragraph 9 of Schedule 1) of which account falls to be taken would have been, or would have been capable of being certified qualifying policy under paragraph 1 of Schedule 2, that policy shall be assumed to have been a qualifying policy for the purposes of paragraph 9(2) of Schedule 1 ; and
- (b) if, apart from this paragraph, the new policy would be, or would be capable of being certified as, a qualifying policy, it shall not be such a policy or, as the case may be, be capable of being so certified unless the circumstances are as specified in paragraph 9(3) of Schedule 1 ; and
- (c) in paragraph 9(3)(b) of Schedule 1 the words "either by a branch or agency of theirs outside the United Kingdom or " shall be omitted.
- (3) In the application of paragraph 9 of Schedule 1 in any case where—
- (a) the old policy is a qualifying policy which was issued in respect of an insurance made on or before 17th November 1983 but, if the insurance had been made after that date, the policy could not have been a qualifying policy by virtue of paragraph 1A of Schedule 2, and
- (b) the new policy is issued after 17th November 1983 and is not a new non-resident policy, as defined in the said paragraph 1A,
the rules for the determination of the question whether the new policy is a qualifying policy shall apply with the modification in sub-paragraph (2)(c) above.
##### 3
If, in the case of a substitution of policies falling within sub-paragraph (1) or sub-paragraph (3) of paragraph 2 above, the new policy confers such an option as results in the application to it of sub-paragraph (3) of paragraph 3 of Schedule 2 (amendment of qualifying conditions) the new policy shall be treated for the purposes of that sub-paragraph as having been issued in respect of an insurance made on the same day as that on which was made the insurance in respect of which the old policy was issued.
##### 4
- (1) For the purposes of Schedule 1 and Part I of Schedule 2, a policy of life insurance which was issued—
- (a) in respect of an insurance made on or before 17th November 1983, and
- (b) by a company resident outside the United Kingdom,
shall be treated as issued in respect of an insurance made after that date if the policy is varied after that date so as to increase the benefits secured or to extend the term of the insurance.
- (2) If a policy of life insurance which was issued as mentioned in paragraphs (a) and (b) of sub-paragraph (1) above confers on the person to whom it is issued an option to have another policy substituted for it or to have any of its terms changed, then for the purposes of that sub-paragraph any change in the terms of the policy which is made in pursuance of the option shall be deemed to be a variation of the policy.
## PART III — Modifications of Chargeable Events Legislation
##### 5
In this Part of this Schedule—
- (a) " chargeable event" has, subject to paragraph 6 below, the meaning assigned to it by section 394 of the Taxes Act (life policies) or, as the case may be, section 398 of that Act (capital redemption policies); and
- (b) " new non-resident policy " has the meaning assigned to it by paragraph 1A of Schedule 2 to the Finance Act 1975.
##### 6
If, in the case of a substitution of policies falling within sub-paragraph (1) or sub-paragraph (3) of paragraph 2 above, the new policy is a qualifying policy, section 394 of the Taxes Act shall have effect with the following modifications:—
- (a) the surrender of the rights conferred by the old policy shall not be a chargeable event; and
- (b) the new policy shall be treated as having been issued in respect of an insurance made on the day referred to in paragraph 3 above.
##### 7
If at any time neither the conditions in sub-paragraph (3) nor the conditions in sub-paragraph (4) of paragraph 1A of Schedule 2 to the Finance Act 1975 are fulfilled with respect to a new non-resident policy which has previously become a qualifying policy, then, from that time onwards, Chapter III of Part XIV of the Taxes Act shall apply in relation to the policy as if it did not fall within subsection (2) of section 394 of that Act (qualifying policies).
##### 8
- (1) On the happening of a chargeable event in relation to a new non-resident policy or a new offshore capital redemption policy, the amount which, apart from this paragraph, would by virtue of section 395 of the Taxes Act be treated as a gain arising in connection with the policy shall be reduced by multiplying it by a fraction of which—
- (a) the denominator is the number of days in the period for which the policy has run before the happening of the chargeable event; and
- (b) the numerator is the number of days in the period referred to in paragraph (a) above on which the policy holder was resident in the United Kingdom.
- (2) The calculation of the number of days in the period referred to in sub-paragraph (1) above shall be made in like manner as is provided in the second paragraph of subsection (3) of section 400 of the Taxes Act (substituting a reference to the number of days for the reference in that paragraph to the number of years).
##### 9
- (1) Subject to sub-paragraph (2) below, where, under section 395 of the Taxes Act, a gain (reduced in accordance with paragraph 8 above) is to be treated as arising in connection with a new non-resident policy or a new offshore capital redemption policy—
- (a) section 399 of that Act shall have effect, in relation to the gain, as if subsection (4) were omitted ; and
- (b) the gain shall be chargeable to tax under Case VI of Schedule D ;
but any relief under section 400 of the Taxes Act shall be computed as if this paragraph had not been enacted.
- (2) Paragraphs (a) and (b) of sub-paragraph (1) above do not apply to a gain arising in connection with a new non-resident policy if the conditions in either sub-paragraph (3) or sub-paragraph (4) of paragraph 1A of Schedule 2 to the Finance Act 1975 are fulfilled at all times between the date on which the policy was issued and the date on which the gain is treated as arising.
##### 10
Where a claim is made under section 400 of the Taxes Act in respect of the amount of a gain treated as arising in connection with a new non-resident policy or a new offshore capital redemption policy (with or without other amounts), the " appropriate fraction " which, in accordance with subsection (2) of that section, is to be applied to that amount shall be modified by deducting from the number of complete years referred to in subsection (3) of that section any complete years during which the policy holder was not resident in the United Kingdom.
##### 11
Paragraph 18 of Schedule 2 to the Finance Act 1975 (which modifies the operation of section 400(3) of the Taxes Act when there is more than one chargeable event of a particular description) shall not apply in relation to a new non resident policy or a new offshore capital redemption policy.
## SCHEDULE 16
### General
##### 1
- (1) The company shall be assumed to be resident in the United Kingdom.
- (2) Nothing in sub-paragraph (1) above requires it to be assumed that there is any change in the place or places at which the company carries on its activities.
- (3) For the avoidance of doubt, it is hereby declared that, if any sums forming part of the company's profits for an accounting period have been received by the company without any deduction of or charge to tax by virtue of section 99 or section 100 of the Taxes Act (securities held by non-residents), the effect of the assumption in sub-paragraph (1) above is that those sums are to be brought within the charge to tax for the purposes of calculating the company's chargeable profits or corresponding United Kingdom tax.
- (4) In any case where—
- (a) it is at any time necessary for any purpose of this Act to determine the chargeable profits of the company for an accounting period, and
- (b) at that time no direction has been given under section 82(1) of this Act with respect to that or any earlier accounting period of the company,
it shall be assumed, for the purpose of any of the following provisions of this Schedule which refer to the first accounting period in respect of which a direction is given under that section, that such a direction has been given for that period (but not for any earlier period).
- (5) Nothing in this Schedule affects any liability for, or the computation of, corporation tax in respect of a trade which is carried on by a company resident outside the United Kingdom through a branch or agency in the United Kingdom.
##### 2
- (1) The company shall be assumed to have become resident in the United Kingdom (and, accordingly, within the charge to corporation tax) at the beginning of the first accounting period in respect of which a direction is given under section 82(1) of this Act and that United Kingdom residence shall be assumed to continue throughout subsequent accounting periods of the company (whether or not a direction is given in respect of all or any of them) until the company ceases to be controlled by persons resident in the United Kingdom.
- (2) Except in so far as the following provisions of this Schedule otherwise provide, for the purposes of calculating a company's chargeable profits or corresponding United Kingdom tax for any accounting period which is not the first such period referred to in sub-paragraph (1) above (and, in particular, for the purpose of applying any relief which is relevant to two or more accounting periods), it shall be assumed that a calculation of chargeable profits or, as the case may be, corresponding United Kingdom tax has been made for every previous accounting period throughout which the company was, by virtue of sub-paragraph (1) above, assumed to have been resident in the United Kingdom.
##### 3
The company shall be assumed not to be a close company.
##### 4
- (1) Subject to sub-paragraph (2) below, where any relief under the Corporation Tax Acts is dependent upon the making of a claim or election, the company shall be assumed to have made that claim or election which would give the maximum amount of relief and to have made that claim or election within any time limit applicable to it
- (2) If, by notice in writing given to the Board at any time not later than the expiry of the time for the making of an appeal under section 88 of this Act or within such longer period as the Board may in any particular case allow, the United Kingdom resident company which has or, as the case may be, any two or more United Kingdom resident companies which together have, a majority interest in the company so request, the company shall be assumed—
- (a) not to have made any claim or election specified in the notice; or
- (b) to have made a claim or election so specified, being different from one assumed by sub-paragraph (1) above but being one which (subject to compliance with any time limit) could have been made in the case of a company within the charge to corporation tax ; or
- (c) to have disclaimed or required the postponement, in whole or in part, of an allowance if (subject to compliance with any time limit) a company within the charge to corporation tax could have disclaimed the allowance or, as the case may be, required such a postponement.
- (3) For the purposes of this paragraph, a United Kingdom resident company has, or two or more United Kingdom resident companies together have, a majority interest in the company if on the apportionment of the company's chargeable profits for the relevant accounting period under subsection (3) of section 82 of this Act, more than half of the profits—
- (a) which are apportioned to United Kingdom resident companies, and
- (b) which give rise to an assessment on any such companies under subsection (4)(a) of that section,
are apportioned to the United Kingdom resident company or companies concerned.
- (4) In sub-paragraph (3) above " the relevant accounting period " means the accounting period or, as the case may be, the first accounting period in which the relief in question is or would be available in accordance with sub-paragraph (1) above.
### Group relief, etc.
##### 5
The company shall be assumed to be neither a member of a group of companies nor a member of a consortium for the purposes of any provision of the Tax Acts.
##### 6
- (1) In relation to section 256 of the Taxes Act (group income) it shall be assumed—
- (a) that the conditions for the making of an election under subsection (1) are not fulfilled with respect to dividends paid or received by the company ; and
- (b) that the conditions for the making of an election under subsection (2) are not fulfilled with respect to payments made or received by the company.
- (2) References in sub-paragraph (1) above to dividends or payments received by the company apply to any received by another person on behalf of or in trust for the company, but not to any received by the company on behalf of or in trust for another person.
##### 7
The company shall be assumed not to be a subsidiary to which the benefit of any advance corporation tax may be surrendered under section 92 of the Finance Act 1972.
### Company reconstructions
##### 8
Without prejudice to the operation of section 252 of the Taxes Act (company reconstructions without change of ownership) in a case where the company is the predecessor, within the meaning of that section, and a company resident in the United Kingdom is the successor, within the meaning of that section, the assumption that the company is resident in the United Kingdom shall not be regarded as requiring it also to be assumed that the company is within the charge to tax in respect of a trade for the purposes of section 252 of the Taxes Act and, accordingly, except in so far as the company is actually within that charge (by carrying on the trade through a branch or agency in the United Kingdom), it shall be assumed that the company can never be the successor, within the meaning of that section, to another company (whether resident in the United Kingdom or not).
### Losses in pre-direction accounting periods
##### 9
- (1) Subject to sub-paragraph (2) below, this paragraph applies in any case where the company incurred a loss in a trade in an accounting period—
- (a) which precedes the first accounting period in respect of which a direction is given under section 82(1) of this Act (in this paragraph referred to as " the starting period "); and
- (b) which ended less than six years before the beginning of the starting period ; and
- (c) in which the company was not resident in the United Kingdom ;
and in this paragraph any such accounting period is referred to as a " pre-direction period ".
- (2) This paragraph does not apply in any case where a declaration is made under paragraph 11(3) below specifying an accounting period of the company which begins before, or is the same as, the first pre-direction period in which the company incurred a loss as mentioned in sub-paragraph (1) above.
- (3) If a claim is made for the purpose by the United Kingdom resident company or companies referred to in paragraph 4(2) above, the chargeable profits (if any) of the company for accounting periods beginning with that pre-direction period which is specified in the claim and in which a loss is incurred as mentioned in sub-paragraph (1) above shall be determined (in accordance with the provisions of this Schedule other than this paragraph) on the assumption that that pre-direction period was the first accounting period in respect of which a direction was given under section 82(1) of this Act.
- (4) A claim under sub-paragraph (3) above shall be made by notice in writing given to the Board within sixty days of the date of the notice under subsection (1) or subsection (3) of section 88 of this Act relating to the starting period or within such longer period as the Board may in any particular case allow.
- (5) For the purposes of a claim under sub-paragraph (3) above, it shall be assumed that Chapter VI of Part II of this Act was in force before the beginning of the first of the pre-direction periods.
- (6) In determining for the purposes of this paragraph which accounting period of the company is the starting period, no account shall be taken of the effect of any declaration under paragraph 11(3) below.
### Capital allowances
##### 10
- (1) Subject to paragraphs 11 and 12 below, if, in an accounting period falling before the beginning of the first accounting period in respect of which a direction is given under section 82(1) of this Act, the company incurred any capital expenditure on the provision of machinery or plant for the purposes of its trade, that machinery or plant shall be assumed, for the purposes of section 44 of the Finance Act 1971 (writing-down allowances and balancing adjustments), not to have been brought into use for the purposes of that trade until the beginning of that first accounting period, and paragraph 7 of Schedule 8 to that Act (expenditure treated as equivalent to market value at the time the machinery or plant is brought into use) shall apply accordingly.
- (2) This paragraph shall be construed as one with Chapter I of Part III of the Finance Act 1971.
##### 11
- (1) This paragraph applies in any case where it appears to the Board that the reason why no direction was given under section 82(1) of this Act in respect of an accounting period which precedes the starting period was that the effect of any allowance which would be assumed for that preceding period by virtue of this Schedule would be such that—
- (a) the company would not have been considered, to be subject in that accounting period to a lower level of taxation in the territory in which it was resident; or
- (b) the company would have had no chargeable profits for that accounting period; or
- (c) the chargeable profits of the company for that accounting period would not have exceeded £20,000 or such smaller amount as was appropriate in accordance with section 83(1)(d) of this Act.
- (2) In this paragraph " the starting period" means the first accounting period in respect of which a direction is given under section 82(1) of this Act and, in a case where a claim is made under sub-paragraph (3) of paragraph 9 above, no account shall be taken of the effect of that sub-paragraph in determining which accounting period is the starting period for the purposes of this paragraph.
- (3) If, in a case where this paragraph applies, the Board so declare by notice in writing given to every company to which, in accordance with section 88(1) of this Act, notice of the making of the direction relating to the starting period is required to be given, the chargeable profits of that period and every subsequent accounting period and the corresponding United Kingdom tax for every subsequent accounting period shall be determined (in accordance with the provisions of this Schedule other than this paragraph) on the assumption that the accounting period specified in the declaration was the first accounting period in respect of which a direction was given and, accordingly, as if allowances had been assumed in respect of that accounting period and any subsequent accounting period which precedes the starting period.
- (4) Nothing in sub-paragraph (3) above affects the operation of paragraph 9(3) above in a case where the accounting period specified in a claim under the said paragraph 9(3) begins before the period specified in a declaration under sub-paragraph (3) above.
- (5) Subject to sub-paragraph (6) below, the Board shall not make a declaration under sub-paragraph (3) above with respect to an accounting period which precedes the starting period unless the facts are such that—
- (a) assuming the company to have been subject in that period to a lower level of taxation in the territory in which it was resident, and
- (b) assuming the company to have had in that period chargeable profits of such an amount that the condition in section 83(1)(d) of this Act would not be fulfilled,
a direction could have been given in respect of that period under section 82(1) of this Act.
- (6) In its application to a company falling within section 84(3) of this Act, sub-paragraph (5) above shall have effect with the omission of paragraph (a).
- (7) In this paragraph "allowance" means an allowance under Chapter I of Part I of the Capital Allowances Act 1968 or Chapter I of Part III of the Finance Act 1971.
##### 12
- (1) Notwithstanding anything in the preceding provisions of this Schedule, if it appears that the transaction by which an asset was acquired by the company had as its sole or main purpose the reduction of the amount of the company's chargeable profits or, as the case may be, corresponding United Kingdom tax for any accounting period (by virtue of the assumption of a relevant allowance in respect of that asset), it shall be assumed that no relevant allowance is available to the company in respect of expenditure incurred on the acquisition of that asset.
- (2) In sub-paragraph (1) above " relevant allowance " means—
- (a) an initial allowance under Chapter I of Part I of the Capital Allowances Act 1968 (industrial buildings and structures); or
- (b) a first-year allowance, as defined in section 41 of the Finance Act 1971.
### Unremittable overseas income
##### 13
For the purposes of the application of section 418 of the Taxes Act (relief for unremittable income) to the company's income it shall be assumed—
- (a) that any reference in paragraph (a) or paragraph (b) of subsection (1) of that section to the United Kingdom is a refererence to both the United Kingdom and the territory in which the company is in fact resident; and
- (b) that a notice under subsection (2) of that section (expressing a wish to be assessed in accordance with that subsection) may be given on behalf of the company by the United Kingdom resident company or companies referred to in paragraph 4(2) above.
## SCHEDULE 17
## PART I — Acceptable Distribution Policy
##### 1
The provisions of this Part of this Schedule have effect for the purposes of paragraph (a) of subsection (1) of section 83 of this Act.
##### 2
- (1) Subject to sub-paragraph (2) below, a controlled foreign company pursues an acceptable distribution policy in respect of a particular accounting period if, and only if—
- (a) a dividend which is not paid out of specified profits is paid for that accounting period or for some other period which, in whole or in part, falls within that accounting period : and
- (b) the dividend is paid during, or not more than eighteen months after the expiry of, the period for which it is paid or at such later time as the Board may in any particular case allow; and
- (c) the proportion of the dividend or, if there is more than one, of the aggregate of those dividends which is paid to persons resident in the United Kingdom represents at least 50 per cent. of the company's available profits for the accounting period referred to in paragraph (a) above or, where sub-paragraph (4) or sub-paragraph (5) below applies, of the appropriate portion of those profits ;
and for the purposes of this sub-paragraph a dividend which is not paid for a specified period shall be treated as paid for the period or periods the profits of which are, in relation to the dividend, the relevant profits for the purposes of section 506 of the Taxes Act (computation of underlying tax on dividends).
- (2) In the case of a controlled foreign company which is not a trading company, sub-paragraph (1) above shall have effect with the substitution of 90 per cent. for 50 per cent.
- (3) For the purposes of this Part of this Schedule, a dividend represents those profits of the controlled foreign company in question which in relation to that dividend are the relevant profits for the purposes of section 506 of the Taxes Act and, accordingly, where those profits are the profits of a period which falls partly within and partly outside an accounting period of that company, the necessary apportionment shall be made to determine what proportion of those profits is attributable to that accounting period.
- (4) This sub-paragraph applies where—
- (a) throughout the accounting period in question all the issued shares of the controlled foreign company are of a single class, and
- (b) at the end of that accounting period some of those shares are held by persons resident outside the United Kingdom, and
- (c) at no time during that accounting period does any person have an interest in the company other than an interest derived from the issued shares of the company,
and in a case where this sub-paragraph applies the appropriate portion for the purposes of sub-paragraph (1)(c) above is the fraction of which the denominator is the total number of the issued shares of the company at the end of the accounting period in question and, subject to sub-paragraph (8) below, the numerator is the number of those issued shares by virtue of which persons resident in the United Kingdom have interests in the company at that time.
- (5) This sub-paragraph applies where—
- (a) throughout the accounting period in question there are only two classes of issued shares of the controlled foreign company and, of those classes, one (in this paragraph referred to as " non-voting shares ") consists of non-voting fixed-rate preference shares and the other (in this paragraph referred to as " voting shares ") consists of shares which carry the right to vote in all circumstances at general meetings of the company, and
- (b) at the end of that accounting period some of the issued shares of the company are held by persons resident outside the United Kingdom, and
- (c) at no time during that accounting period does any person have an interest in the company other than an interest derived from non-voting shares or voting shares,
and in a case where this sub-paragraph applies the appropriate portion of the profits referred to in sub-paragraph (1)(c) above is the amount determined in accordance with sub-paragraph (6) below.
- (6) The amount referred to in sub-paragraph (5) above is that given by the formula—
$$P×QR+(X−P)×YZ$ where— P is the amount of any dividend falling within paragraphs (a) and (b) of sub-paragraph (1) above which is paid in respect of the non-voting shares or, if there is more than one such dividend, of the aggregate of them; Q is, subject to sub-paragraph (8) below, the number of the nonvoting shares by virtue of which persons resident in the United Kingdom have interests in the company at the end of the accounting period in question; R is the total number at that time of the issued non-voting shares; X is the available profits for the accounting period in question ; Y is, subject to sub-paragraph (8) below, the number of voting shares by virtue of which persons resident in the United Kingdom have interests in the company at the end of that accounting period ; and Z is the total number at that time of the issued voting shares.$
- (7) For the purposes of sub-paragraph (5)(a) above, non-voting fixed-rate preference shares are shares—
- (a) which are fixed-rate preference shares as defined in paragraph 1 of Schedule 12 to the Finance Act 1973 ; and
- (b) which either carry no right to vote at a general meeting of the company or carry such a right which is contingent upon the non-payment of a dividend on the shares and which has not in fact become exercisable at any time prior to the payment of a dividend for the accounting period in question.
- (8) In any case where the immediate interests held by persons resident in the United Kingdom who have indirect interests in a controlled foreign company at the end of a particular accounting period do not reflect the proportion of the shares or, as the case may be, shares of a particular class in the company by virtue of which they have those interests (as in a case where they hold, directly or indirectly, part of the shares in a company which itself holds, directly or indirectly, some or all of the shares in the controlled foreign company) the number of those shares shall be treated as reduced for the purposes of sub-paragraph (4) or, as the case may be, sub-paragraph (6) above to such number as may be appropriate having regard to—
- (a) the immediate interests held by the persons resident in the United Kingdom; and
- (b) any intermediate shareholdings between those interests and the shares in the controlled foreign company.
- (9) The definition of " profits " in section 82(6)(b) of this Act does not apply to any reference in this paragraph to specified profits or to relevant profits for the purposes of section 506 of the Taxes Act
##### 3
- (1) Subject to sub-paragraph (2) below, for the purposes of this Part of this Schedule, the available profits of a controlled foreign company for any accounting period shall be ascertained, subject to sub-paragraph (5) below, by—
- (a) determining what would be the relevant profits of that period for the purposes of section 506 of the Taxes Act if a dividend were paid for that period ; and
- (b) deducting so much of those relevant profits as consists of an excess of capital profits over capital losses.
- (2) If, for any accounting period of the controlled foreign company which—
- (a) is of less than twelve months' duration, and
- (b) is not an accounting period which, but for the coming into operation of this Chapter on 6th April 1984, would have begun before that date and been of at least twelve months' duration,
the available profits, as ascertained under sub-paragraph (1) above, are less than the chargeable profits (determined on the additional assumptions in section 85(3)(a) of this Act), then, if the Board so declare, for the purposes of this Part of this Schedule the available profits for the accounting period shall be those chargeable profits.
- (3) The definition of " profits " in section 82(6)(b) of this Act does not apply to the reference in sub-paragraph (1)(a) above to relevant profits for the purposes of section 506 of the Taxes Act
- (4) In sub-paragraph (1)(b) above " capital profits " means gains—
- (a) which accrue on the disposal of assets ; and
- (b) which, if the company were within the charge to corporation tax in respect of the activities giving rise to those disposals, would not be taken into account as receipts in computing the company's income or profits or gains or losses for the purposes of the Income Tax Acts ;
and the expression " capital losses " shall be construed accordingly.
- (5) In any case where—
- (a) a controlled foreign company pays a dividend for any period out of specified profits, and
- (b) those specified profits represent dividends received by the company, directly or indirectly, from another controlled foreign company,
so much of those specified profits as is equal to the dividend referred to in paragraph (a) above shall be left out of account in determining, for the purposes of this Part of this Schedule, the available profits of the controlled foreign company referred to in that paragraph for any accounting period.
##### 4
- (1) For the purposes of this Part of this Schedule, where—
- (a) a controlled foreign company pays a dividend (in this paragraph referred to as " the initial dividend") to another company which is also not resident in the United Kingdom, and
- (b) that other company or another company which is related to it pays a dividend (in this paragraph referred to as " the subsequent dividend ") to a United Kingdom resident, and
- (c) the subsequent dividend is paid out of profits which are derived, directly or indirectly, from the whole or part of the initial dividend,
so much of the initial dividend as is represented by the subsequent dividend shall be regarded as paid to the United Kingdom resident
- (2) For the purposes of this paragraph, one company is related to another if the other—
- (a) controls directly or indirectly, or
- (b) is a subsidiary of a company which controls directly or indirectly,
at least 10 per cent. of the voting power in the first-mentioned company ; and where one company is so related to another and that other is so related to a third company, the first company is for the purposes of this paragraph related to the third, and so on where there is a chain of companies, each of which is related to the next
## PART II — Exempt Activities
##### 5
- (1) The provisions of this Part of this Schedule have effect for the purposes of paragraph (b) of subsection (1) of section 83 of this Act.
- (2) In the case of a controlled foreign company—
- (a) which is, by virtue of section 84(3) of this Act, presumed to be resident in a territory in which it is subject to a lower level of taxation, and
- (b) the business affairs of which are, throughout the accounting period in question, effectively managed in a territory outside the United Kingdom other than one in which companies are liable to tax by reason of domicile, residence or place of management,
references in the following provisions of this Part of this Schedule to the territory in which that company is resident shall be construed as references to the territory falling within paragraph (b) above or, if there is more than one, to that one of them which may be notified to the Board by the United Kingdom resident company or companies referred to in paragraph 4(2) of Schedule 16 to this Act.
##### 6
- (1) Throughout an accounting period a controlled foreign company is engaged in exempt activities if, and only if, each of the following conditions is fulfilled,—
- (a) that, throughout that accounting period, the company has a business establishment in the territory in which it is resident ; and
- (b) that, throughout that accounting period, its business affairs in that territory are effectively managed there ; and
- (c) that any of sub-paragraphs (2) to (4) below applies to the company.
- (2) This sub-paragraph applies to a company if,—
- (a) at no time during the accounting period in question does the main business of the company consist of either—
- (i) investment business, or
- (ii) dealing in goods for delivery to or from the United Kingdom or to or from connected or associated persons ; and
- (b) in the case of a company which is mainly engaged in wholesale, distributive or financial business in that accounting period, less than 50 per cent. of its gross trading receipts from that business is derived directly or indirectly from connected or associated persons.
- (3) This sub-paragraph applies to a company which is a holding company if at least 90 per cent. of its gross income during the accounting period in question is derived directly from companies which it controls and which, throughout that period,—
- (a) are resident in the territory in which the holding company is resident; and
- (b) are not themselves holding companies, but otherwise are, in terms of this Schedule, engaged in exempt activities ;
and a holding company to which this sub-paragraph applies is in this Part of this Schedule referred to as a " local holding company ".
- (4) This sub-paragraph applies to a company which is a holding company, but not a local holding company, if at least 90 per cent. of its gross income during the accounting period in question is derived directly from companies which it controls and which, throughout that period,—
- (a) are local holding companies; or
- (b) are not themselves holding companies (whether local or not), but otherwise are, in terms of this Schedule, engaged in exempt activities.
- (5) Any reference in sub-paragraph (3) or sub-paragraph (4) above to a company which a holding company controls includes a reference to a trading company in which the holding company holds the maximum amount of ordinary share capital which is permitted under the law of the territory—
- (a) in which the trading company is resident; and
- (b) from whose laws the trading company derives its status as a company.
- (6) The following provisions of this Part of this Schedule have effect in relation to sub-paragraphs (1) to (4) above.
##### 7
- (1) For the purposes of paragraph 6(1)(a) above, a " business establishment'', in relation to a controlled foreign company, means premises—
- (a) which are, or are intended to be, occupied and used with a reasonable degree of permanence ; and
- (b) from which the company's business in the territory in which it is resident is wholly or mainly carried on.
- (2) For the purposes of sub-paragraph (1) above, the following shall be regarded as premises,—
- (a) an office, shop, factory or other building or part of a building ; or
- (b) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources ; or
- (c) a building site or the site of a construction or installation project;
but such a site as is referred to in paragraph (c) above shall not be regarded as " premises " unless the building work or the project, as the case may be, has a duration of at least twelve months.
##### 8
- (1) Subject to sub-paragraph (4) below, the condition in paragraph 6(1)(b) above shall not be regarded as fulfilled unless—
- (a) the number of persons employed by the company in the territory in which it is resident is adequate to deal with the volume of the company's business ; and
- (b) any services provided by the company for persons resident outside that territory are not in fact performed in the United Kingdom.
- (2) For the purposes of sub-paragraph (1)(a) above, persons who are engaged wholly or mainly in the business of the company and whose remuneration is paid by a person connected with, and resident in the same territory as, the company shall be treated as employed by the company.
- (3) In the case of a holding company, sub-paragraph (2) above shall apply with the omission of the words " wholly or mainly ".
- (4) For the purposes of sub-paragraph (1)(b) above, no account shall be taken—
- (a) of services provided through a branch or agency of the controlled foreign company if the profits or gains of the business carried on through the branch or agency are within the charge to tax in the United Kingdom ; or
- (b) of services provided through any other person whose profits or gains from the provision of the services are within the charge to tax in the United Kingdom and who provides the services for a consideration which is, or which is not dissimilar from what might reasonably be expected to be, determined under a contract entered into at arm's length ; or
- (c) of services which are no more than incidental to services provided outside the United Kingdom.
##### 9
- (1) Subject to sub-paragraph (3) below, for the purposes of paragraph 6(2)(a)(i) above, each of the following activities constitutes investment business,—
- (a) the holding of securities, patents or copyrights;
- (b) dealing in securities, other than in the capacity of a broker ;
- (c) the leasing of any description of property or rights ; and
- (d) the investment in any manner of funds which would otherwise be available, directly or indirectly, for investment by or on behalf of any person (whether resident in the United Kingdom or not) who has, or is connected or associated with a person who has, control, either alone or together with other persons, of the controlled foreign company in question.
- (2) In sub-paragraph (1)(b) above "broker" includes any person offering to sell securities to, or purchase securities from, members of the public generally.
- (3) For the purposes of paragraph 6(2) above, in the case of a company which is mainly engaged in banking or any similar business falling within paragraph 11(1)(c) below, nothing in sub-paragraph (1) above shall require the main business of die company to be regarded as investment business.
##### 10
Goods which are actually delivered into the territory in which the controlled foreign company is resident shall not be taken into account for the purposes of paragraph 6(2)(a)(ii) above.
##### 11
- (1) For the purposes of paragraph 6(2)(b) above, each of the following activities constitutes wholesale, distributive or financial business,—
- (a) dealing in any description of goods wholesale rather than retail;
- (b) the business of shipping or air transport, as defined in section 514(1) of the Taxes Act;
- (c) banking or any similar business involving the receipt of deposits, loans or both and the making of loans or investments ;
- (d) the administration of trusts;
- (e) dealing in securities in the capacity of a broker, as defined in paragraph 9(2) above ;
- (f) dealing in commodity or financial futures; and
- (g) insurance business which is long-term business or general business, as defined in section 1 of the Insurance Companies Act 1982.
- (2) In a case where the gross trading receipts of a company include an amount in respect of the proceeds of sale of any description of property or rights, the cost to the company of the purchase of that property or those rights shall be a deduction in calculating the company's gross trading receipts for the purposes of paragraph 6(2)(b) above.
- (3) In the case of a controlled foreign company engaged in a banking or other business falling within sub-paragraph (1)(c) above, no payment of interest received from a company resident in the United Kingdom shall be regarded for the purposes of paragraph 6(2)(b) above as a receipt derived directly or indirectly from connected or associated persons, but it shall be conclusively presumed that the condition in paragraph 6(2)(b) above is not fulfilled if, at any time during the accounting period in question, the amount by which the aggregate value of the capital interests in the company held directly or indirectly by—
- (a) the persons who have control of the company, and
- (b) any person connected or associated with those persons,
exceeds the value of the company's fixed assets is 15 per cent. or more of the amount by which the company's outstanding capital exceeds that value.
- (4) For the purposes of this paragraph, in relation to a controlled foreign company,—
- (a) " capital interest" means an interest in the issued share capital or reserves of the company or in a loan to or deposit with the company or the liability of a guarantor under a guarantee given to or for the benefit of the company;
- (b) except in the case of the liability of a guarantor, the value of a capital interest is its value as shown in the company's accounts ;
- (c) in the case of the liability of a guarantor, the value shall be taken to be the market value of the benefit which the controlled foreign company derives from the provision of the guarantee ;
- (d) the value of the company's fixed assets means the value, as shown in the company's accounts, of the plant, premises and trade investments employed in the company's business ; and
- (e) " outstanding capital" means the total value of all the capital interests in the company, less the value, as shown in the company's accounts, of any advances made by the company to persons resident outside the United Kingdom and falling within paragraph (a) or paragraph (b) of sub-paragraph (3) above.
- (5) For the purposes of sub-paragraph (4) above—
- (a) " trade investments", in relation to a controlled foreign company, means securities any profit on the sale of which would not be brought into account as a trading receipt in computing the chargeable profits of an accounting period in which that profit arose ; and
- (b) the reference in paragraph (e) to advances made to a person by the controlled foreign company includes, in the case of a company which is a person resident outside the United Kingdom and falling within paragraph (a) or paragraph (b) of sub-paragraph (3) above, any securities of that company which are held by the controlled foreign company but are not trade investments, as defined in paragraph (a) above ;
and in this sub-paragraph " securities " includes stocks and shares.
- (6) In the application of paragraph 6(2)(b) above in the case of a controlled foreign company engaged in insurance business of any kind—
- (a) the reference to gross trading receipts which are derived directly or indirectly from connected or associated persons is a reference to those which, subject to sub-paragraph (7) below, are attributable, directly or indirectly, to liabilities undertaken in relation to any of those persons or their property;
- (b) the only receipts to be taken into account are commissions and premiums received under insurance contracts;
- (c) so much of any such commission or premium as is returned is not to be taken into account; and
- (d) when a liability under an insurance contract is reinsured, in whole or in part, the amount of the premium which is attributable, directly or indirectly, to that liability shall be treated as reduced by so much of the premium under the reinsurance contract as is attributable to that liability.
- (7) In determining, in relation to a controlled foreign company to which sub-paragraph (6) above applies, the gross trading receipts referred to in paragraph (a) of that sub-paragraph, there shall be left out of account any receipts under a local reinsurance contract which are attributable to liabilities which—
- (a) are undertaken under an insurance contract made in the territory in which the company is resident; and
- (b) are not reinsured under any contract other than a local reinsurance contract; and
- (c) relate either to persons who are resident in that territory and are neither connected nor associated with the company or to property which is situated there and belongs to persons who are not so connected or associated ;
and in paragraph (a) above " insurance contract" does not include a reinsurance contract.
- (8) In sub-paragraph (7) above " local reinsurance contract" means a reinsurance contract—
- (a) which is made in the territory in which the controlled foreign company is resident; and
- (b) the parties to which are companies which are resident in that territory.
- (9) For the purposes of sub-paragraphs (7) and (8) above, any question as to the territory in which a company is resident shall be determined in accordance with section 84 of this Act and, where appropriate, paragraph 5(2) above ; and, for the purpose of the application of those provisions in accordance with this sub-paragraph, the company shall be assumed to be a controlled foreign company.
##### 12
- (1) Subject to sub-paragraph (2) below, in paragraphs 6 and 8(3) above and sub-paragraphs (4) and (5) below " holding company " means—
- (a) a company the business of which consists wholly or mainly in the holding of shares or securities of companies which are either local holding companies and its 90 per cent. subsidiaries or trading companies and either its 51 per cent. subsidiaries or companies falling within paragraph 6(5) above ; or
- (b) a company which would fall within paragraph (a) above if there were disregarded so much of its business as consists in the holding of property or rights of any description for use wholly or mainly by companies which it controls and which are resident in the territory in which it is resident.
- (2) In determining whether a company is a holding company for the purposes of paragraph 6(3) above (and, accordingly, whether the company is or may be a local holding company), sub-paragraph (1) above shall have effect with the omission from paragraph (a) thereof of the words " either local holding companies and its 90 per cent. subsidiaries or ".
- (3) In its application for the purposes of this paragraph, section 532 of the Taxes Act shall have effect with the omission—
- (a) from subsection (1)(a) of the words " or indirectly "; and
- (b) of subsection (2).
- (4) For the purposes of sub-paragraph (3) or, as the case may be sub-paragraph (4) of paragraph 6 above, as it applies in relation to a holding company part of whose business consists of activities other than the holding of shares or securities or the holding of property or rights as mentioned in paragraph (a) or paragraph (b) of sub-paragraph (1) above, the company's gross income during any accounting period shall be determined as follows—
- (a) there shall be left out of account so much of what would otherwise be the company's gross income as is derived from any activity which, if it were the business in which the company is mainly engaged, would be such that paragraph 6(2) above would apply to the company ; and
- (b) to the extent that the receipts of the company from any other activity include receipts from the proceeds of sale of any description of property or rights, the cost to the company of the purchase of that property or those rights shall (to the extent that the cost does not exceed the receipts) be a deduction in calculating the company's gross income, and no other deduction shall be made in respect of that activity.
- (5) For the purposes of sub-paragraphs (3) and (4) of paragraph 6 above, so much of the income of a holding company as—
- (a) is derived directly from another company which it controls and which is not a holding company but otherwise is, in terms of this Schedule, engaged in exempt activities, and
- (b) was or could have been paid out of any non-trading income of that other company which is derived directly or indirectly from a third company connected or associated with it,
shall be treated, in relation to the holding company, as if it were not derived directly from companies which it controls.
- (6) The reference in sub-paragraph (5) above to the non-trading income of a company is a reference to so much of its income as, if the company were carrying on its trade in the United Kingdom, would not be within the charge to corporation tax under Case I of Schedule D.
## PART III — The Public Quotation Condition
##### 13
- (1) The provisions of this Part of this Schedule have effect for the purposes of paragraph (c) of subsection (1) of section 83 of this Act.
- (2) Subject to paragraph 14 below, a controlled foreign company fulfils the public quotation condition with respect to a particular accounting period if—
- (a) shares in the company carrying not less than 35 per cent. of the voting power in the company (and not being shares entitled to a fixed rate of dividend, whether with or without a further right to participate in profits) have been allotted unconditionally to, or acquired unconditionally by, the public and, throughout that accounting period, are beneficially held by the public ; and
- (b) within the period of twelve months ending at the end of the accounting period, any such shares have been the subject of dealings on a recognised stock exchange situated in the territory in which the company is resident; and
- (c) within that period of twelve months the shares have been quoted in the official list of such a recognised stock exchange.
##### 14
- (1) The condition in paragraph 13(2) above is not fulfilled with respect to an accounting period of a controlled foreign company if at any time in that period the total percentage of the voting power in the company possessed by all of the company's principal members exceeds 85 per cent.
- (2) For the purposes of paragraph 13(2) above, shares in a controlled foreign company shall be deemed to be beneficially held by the public if they are held by any person other than—
- (a) a person connected or associated with the company ; or
- (b) a principal member of the company ;
and a corresponding construction shall be given to the reference to shares which have been allotted unconditionally to, or acquired unconditionally by, the public.
##### 15
- (1) References in this Part of this Schedule to shares held by any person include references to any shares the rights or powers attached to which could, for the purposes of section 302 of the Taxes Act (meaning of " control") be attributed to that person under subsection (5) of that section (nominees).
- (2) For the purposes of this Part of this Schedule—
- (a) a person is a principal member of a controlled foreign company if he possesses a percentage of the voting power in the company of more than 5 per cent. and,—
- (i) where there are more than five such persons, if he is one of the five persons who possess the greatest percentages, or
- (ii) if, because two or more persons possess equal percentages of the voting power in the company, there are no such five persons, he is one of the six or more persons (so as to include those two or more who possess equal percentages) who possess the greatest percentages ; and
- (b) a principal member's holding consists of the shares which carry the voting power possessed by him.
- (3) In arriving at the voting power which a person possesses, there shall be attributed to him any voting power which, for the purposes of section 302 of the Taxes Act, would be attributed to him under subsection (5) or subsection (6) of that section (nominees, controlled companies and associates).
- (4) In this Part of this Schedule " share " includes stock.
## PART IV — Reductions in United Kingdom Tax and Diversion of Profits
##### 16
- (1) The provisions of this Part of this Schedule have effect for the purposes of subsection (3) of section 83 of this Act.
- (2) Any reference in paragraphs 17 and 18 below to a transaction—
- (a) is a reference to a transaction reflected in the profits arising in an accounting period of a controlled foreign company; and
- (b) includes a reference to two or more such transactions taken together.
##### 17
- (1) A transaction achieves a reduction in United Kingdom tax if, had the transaction not been effected, any person—
- (a) would have been liable for any such tax or for a greater amount of any such tax ; or
- (b) would not have been entitled to a relief from or repayment of any such tax or would have been entitled to a smaller relief from or repayment of any such tax.
- (2) In this Part of this Schedule and section 83(3) of this Act " United Kingdom tax " means income tax, corporation tax or capital gains tax.
##### 18
It is the main purpose or one of the main purposes of a transaction to achieve a reduction in United Kingdom tax if this is the purpose or one of the main purposes—
- (a) of the controlled foreign company concerned ; or
- (b) of a person who has an interest in that company at any time during the accounting period concerned.
##### 19
- (1) The existence of a controlled foreign company achieves a reduction in United Kingdom tax by a diversion of profits from the United Kingdom in an accounting period if it is reasonable to suppose that, had neither the company nor any company related to it been in existence,—
- (a) the whole or a substantial part of the receipts which are reflected in the controlled foreign company's profits in that accounting period would have been received by a company or individual resident in the United Kingdom; and
- (b) that company or individual or any other person resident in the United Kingdom either—
- (i) would have been liable for any United Kingdom tax or for a greater amount of any such tax ; or
- (ii) would not have been entitled to a relief from or repayment of any such tax or would have been entitled to a smaller relief from or repayment of any such tax.
- (2) For the purposes of sub-paragraph (1) above, a company is related to a controlled foreign company if—
- (a) it is resident outside the United Kingdom; and
- (b) it is connected or associated with the controlled foreign company; and
- (c) in relation to any company or companies resident in the United Kingdom, it fulfils or could fulfil, directly or indirectly, substantially the same functions as the controlled foreign company.
- (3) Any reference in sub-paragraph (1) above to a company resident in the United Kingdom includes a reference to such a company which, if the controlled foreign company in question were not in existence, it is reasonable to suppose would have been established.
## SCHEDULE 18
### Trading losses and group relief etc.
##### 1
- (1) In any case where—
- (a) an amount of chargeable profits is apportioned to a company resident in the United Kingdom, and
- (b) the company is entitled, or would on the making of a claim be entitled, in computing its profits for the appropriate accounting period, to a deduction in respect of any relevant allowance, and
- (c) for the appropriate accounting period the company has no profits against which a deduction could be made in respect of that allowance or, as the case may be, the amount of that allowance exceeds the profits against which a deduction falls to be made in respect of it,
then, on the making of a claim, a sum equal to corporation tax at the appropriate rate on so much of the relevant allowance or, as the case may be, of the excess of it referred to in paragraph (c) above as is specified in the claim shall be set off against the company's liability to tax under section 82(4)(a) of this Act in respect of the chargeable profits apportioned to it.
- (2) In this paragraph—
- (a) " the appropriate accounting period " means the accounting period for which, by virtue of section 89(2) of this Act, the company is regarded as assessed to corporation tax in respect of the chargeable profits concerned ; and
- (b) "the appropriate rate" means the rate of corporation tax applicable to profits of the appropriate accounting period or, if there is more than one such rate, the average rate over the whole accounting period.
- (3) In this paragraph " relevant allowance " means—
- (a) any loss to which section 177(2) of the Taxes Act applies ;
- (b) any charge on income to which section 248(1) of that Act applies;
- (c) any expenses of management to which section 304(1) of that Act applies ;
- (d) so much of any allowance to which section 74 of the Capital Allowances Act 1968 applies as falls within subsection (3) of that section ; and
- (e) any amount available to the company by way of group relief.
- (4) In any case where, for the appropriate accounting period, an amount would have been available to the company by way of group relief if a claim had been made under section 264 of the Taxes Act, such a claim may be made for the purposes of this paragraph at any time before the end of the accounting period following that in which the assessment under section 82(4)(a) of this Act is made, notwithstanding that the period of two years referred to in section 264(1)(c) of the Taxes Act has expired.
- (5) Where, by virtue of sub-paragraph (1) above, a sum is set off against a liability to tax, so much of the relevant allowance as gives rise to the amount set off shall be regarded for the purposes of the Tax Acts as having been allowed as a deduction against the company's profits in accordance with the appropriate provisions of those Acts.
- (6) In its application to a claim under this paragraph, section 43 of the Taxes Management Act 1970 (time limit for making claims) shall have effect as if, in subsection (2),—
- (a) any reference to an assessment to income tax were a reference to an assessment under section 82(4)(a) of this Act; and
- (b) any reference to a year of assessment were a reference to an accounting period.
### Advance corporation tax
##### 2
- (1) In any case where—
- (a) an amount of chargeable profits is apportioned to a company resident in the United Kingdom, and
- (b) the company has an amount of advance corporation tax which, apart from this paragraph, would, in relation to the appropriate accounting period, be surplus advance corporation tax for the purposes of subsection (3) of section 85 of the Finance Act 1972,
then, on the making of a claim, so much of that advance corporation tax as is specified in the claim and does not exceed the relevant maximum shall be set against the company's liability to tax under section 82(4)(a) of this Act in respect of the chargeable profits apportioned to it, to the extent that that liability has not or could not have been relieved by virtue of paragraph 1 above.
- (2) So much of any advance corporation tax as, by virtue of this paragraph, is set against the company's liability to tax under section 82(4)(a) of this Act in respect of chargeable profits shall be regarded for the purposes of the Tax Acts as not being surplus advance corporation tax within the meaning of section 85 of the Finance Act 1972.
- (3) In this paragraph " the appropriate accounting period " has the same meaning as in paragraph 1 above and " the relevant maximum ", in relation to the liability to tax referred to in sub-paragraph (1) above, is the amount of advance corporation tax that would have been payable (apart from section 89 of the Finance Act 1972) in respect of a distribution made at the end of the appropriate accounting period of an amount which, together with the advance corporation tax in respect of it, is equal to—
- (a) that amount of the chargeable profits apportioned to the company on which it is chargeable to corporation tax for that accounting period, less
- (b) any amount which, for that accounting period, is to be regarded, by virtue of paragraph 1(5) above, as having been allowed as a deduction against the company's profits.
### Gains on disposal of shares in controlled foreign company etc.
##### 3
- (1) This paragraph applies in any case where—
- (a) a direction has been given under section 82(1) of this Act in respect of an accounting period of a controlled foreign company (in this paragraph referred to as "the direction period "); and
- (b) the company's chargeable profits for the direction period have been apportioned among the persons referred to in section 82(3) of this Act; and
- (c) a company resident in the United Kingdom (in this section referred to as " the claimant company ") disposes of—
- (i) shares in the controlled foreign company, or
- (ii) shares in another company which, in whole or in part, give rise to the claimant company's interest in the controlled foreign company,
being, in either case, shares acquired before the end of the direction period ; and
- (d) by virtue of the apportionment referred to in paragraph (b) above, under section 82(4)(a) of this Act a sum is assessed on and recoverable from the claimant company as if it were an amount of corporation tax ; and
- (e) the claimant company makes a claim for relief under this paragraph ;
and in this paragraph the disposal mentioned in paragraph (c) above is referred to as " the relevant disposal".
- (2) Subject to the following provisions of this section, in the computation under Chapter II of Part II of the Capital Gains Tax Act 1979 of the gain accruing on the relevant disposal, the appropriate fraction of the sum referred to in sub-paragraph (1)(d) above shall be allowable as a deduction; but to the extent that any sum has been allowed as a deduction under this sub-paragraph it shall not again be allowed as a deduction on any claim under this paragraph (whether made by the claimant company or another company).
- (3) In relation to the relevant disposal, the appropriate fraction means that of which the numerator is the average market value in the direction period of the shares disposed of and the denominator is the average market value in that period of the interest in the controlled foreign company which, in the case of the claimant company, was taken into account in the apportionment referred to in sub-paragraph (1)(b) above.
- (4) Where, before the relevant disposal,—
- (a) a dividend is paid by the controlled foreign company, and
- (b) the profits out of which the dividend is paid are those from which the chargeable profits referred to in sub-paragraph (1)(b) above are derived, and
- (c) at least one of the two conditions in sub-paragraph (5) below is fulfilled,
this paragraph does not apply in relation to a sum assessed and recoverable in respect of so much of the chargeable profits as corresponds to the profits which the dividend represents.
- (5) The conditions referred to in sub-paragraph (4)(c) above are—
- (a) that the effect of the payment of the dividend is such that the value of the shares disposed of by the relevant disposal is less after the payment than it was before it; and
- (b) that, in respect of a dividend paid or payable on the shares disposed of by the relevant disposal, the claimant company is, by virtue of paragraph 4(2) below, entitled under Part XVIII of the Taxes Act to relief (by way of underlying tax) by reference to sums which include the sum referred to in sub-paragraph (1)(d) above.
- (6) A claim for relief under this paragraph shall be made before the expiry of the period of three months beginning—
- (a) at the end of the accounting period in which the relevant disposal occurs ; or
- (b) if it is later, on the date on which the assessment to tax for which the claimant company is liable by virtue of section 82(4)(a) of this Act becomes final and conclusive.
- (7) In identifying for the purposes of this paragraph shares in a company with shares of the same class which are disposed of by the relevant disposal, shares acquired at an earlier time shall be deemed to be disposed of before shares acquired at a later time.
### Dividends from the controlled foreign company
##### 4
- (1) This paragraph applies in any case where—
- (a) a direction has been given under section 82(1) of this Act in respect of an accounting period of a controlled foreign company, and
- (b) the company's chargeable profits for that period have been apportioned among the persons referred to in section 82(3) of this Act, and
- (c) the controlled foreign company pays a dividend in whole or in part out of the total profits from which (in accordance with section 82(6)(a) of this Act) those chargeable profits are derived.
- (2) Subject to paragraphs 5 and 6 below, where this paragraph applies, the aggregate of the sums assessed on and recoverable from companies resident in the United Kingdom in accordance with section 82(4)(a) of this Act in respect of the chargeable profits referred to in sub-paragraph (1)(b) above shall be treated for the purposes of Part XVIII of the Taxes Act (double taxation relief) as if it were an amount of tax paid in respect of the profits concerned under the law of the territory in which the controlled foreign company was resident and, accordingly, as underlying tax for the purposes of Chapter II of that Part.
- (3) In the following provisions of this paragraph and in paragraphs 5 and 6 below the aggregate of the sums which, under sub-paragraph (2) above, fall to be treated as underlying tax is referred to as the " gross attributed tax ".
- (4) If, in the case of a person who receives the dividend, section 504 or section 505 of the Taxes Act (1imit on credit) has the effect of reducing the amount which (apart from that section) would have been the amount of the credit for foreign tax which is to be allowed to that person, then, for the purposes of sub-paragraph (5) below, the amount of that reduction shall be determined and so much of it as does not exceed the amount of the foreign tax, exclusive of underlying tax, for which credit is to be allowed in respect of the dividend is in that sub-paragraph referred to as " the wasted relief ".
- (5) Except for the purpose of determining the amount of the wasted relief, the gross attributed tax shall be treated as reduced by the aggregate of the wasted relief arising in the case of all the persons falling within sub-paragraph (4) above and, on the making of a claim by any of the companies referred to in sub-paragraph (2) above,—
- (a) the sum assessed on and recoverable from the company in accordance with section 82(4)(a) of this Act in respect of the chargeable profits referred to in sub-paragraph (1)(b) above shall, where appropriate, be reduced ; and
- (b) all such adjustments (whether by repayment of tax or otherwise) shall be made as are appropriate to give effect to any reduction under paragraph (a) above.
##### 5
- (1) In so far as any provision of—
- (a) arrangements having effect by virtue of section 497 of the Taxes Act (relief by agreement with other countries), or
- (b) section 498 of that Act (unilateral relief),
makes relief which is related to foreign dividends received by a company resident in the United Kingdom conditional upon that company either having a particular degree of control of the company paying the dividend or being a subsidiary of another company which has that degree of control, that condition shall be treated as fulfilled in considering whether any such company is by virtue of paragraph 4(2) above entitled to relief under Part XVIII of that Act in respect of any of the gross attributed tax.
- (2) Notwithstanding anything in paragraph 4(2) above, in section 503(2)(b) of the Taxes Act (income from dividends treated as increased by underlying tax) the expression "underlying tax" does not include gross attributed tax.
- (3) In a case where the controlled foreign company pays a dividend otherwise than out of specified profits and, on the apportionment referred to in paragraph 4(1) above, less than the whole of the chargeable profits of the controlled foreign company concerned is apportioned to companies which are resident in the United Kingdom and liable for tax thereon as mentioned in section 82(4)(a) of this Act,—
- (a) the gross attributed tax shall be regarded as attributable to a corresponding proportion of the profits in question, and in this sub-paragraph the profits making up that proportion are referred to as " taxed profits " ;
- (b) so much of the dividend as is received by, or by a successor in title of, any such company shall be regarded as paid primarily out of taxed profits ; and
- (c) so much of the dividend as is received by any other person shall be regarded as paid primarily out of profits which are not taxed profits.
- (4) The reference in sub-paragraph (3)(b) above to a successor in title of a company resident in the United Kingdom is a reference to a person who is such a successor in respect of the whole or any part of that interest in the controlled foreign company by virtue of which an amount of its chargeable profits was apportioned to that company.
##### 6
- (1) In any case where—
- (a) on a claim for relief under paragraph 3 above, the whole or any part of any sum has been allowed as a deduction on a disposal of shares in any company, and
- (b) that sum forms part of the gross attributed tax in relation to a dividend paid by that company, and
- (c) a person receiving the dividend in respect of the shares referred to in paragraph (a) above (in this paragraph referred to as " the primary dividend ") or any other relevant dividend is, by virtue of paragraph 4(2) above, entitled under Part XVIII of the Taxes Act to relief (by way of underlying tax) by reference to the whole or any part of the gross attributed tax,
the amount which, apart from this paragraph, would be available by way of such relief to the person referred to in paragraph (c) above shall be reduced or, as the case may be, extinguished by deducting therefrom the amount allowed by way of relief as mentioned in paragraph (a) above.
- (2) For the purposes of sub-paragraph (1)(c) above, in relation to the primary dividend, another dividend is a relevant dividend if—
- (a) it is a dividend in respect of shares in a company which is resident outside the United Kingdom; and
- (b) it represents profits which, directly or indirectly, consist of or include the primary dividend.
## SCHEDULE 19
## PART I — The Distribution Test
### Requirements as to distributions
##### 1
- (1) For the purposes of this Chapter, an offshore fund pursues a full distribution policy with respect to an account period if—
- (a) a distribution is made for that account period or for some other period which, in whole or in part, falls within that account period; and.
- (b) subject to Part II of this Schedule, the amount of the distribution which is paid to the holders of material and other interests in the fund—
- (i) represents at least 85 per cent. of the income of the fund for that period, and
- (ii) is not less than 85 per cent. of the fund's United Kingdom equivalent profits for that period ; and
- (c) the distribution is made during that account period or not more than six months after the expiry of it; and
- (d) the form of the distribution is such that, if any sum forming part of it were received in the United Kingdom by a person resident there and did not form part of the profits of a trade, profession or vocation, that sum would fall to be chargeable to tax under Case IV or Case V of Schedule D ;
and any reference in this sub-paragraph to a distribution made for an account period includes a reference to any two or more distributions so made or, in the case of paragraph (b), the aggregate of them.
- (2) Subject to sub-paragraph (3) below, with respect to any account period for which—
- (a) there is no income of the fund, and
- (b) there are no United Kingdom equivalent profits of the fund,
the fund shall be treated as pursuing a full distribution policy notwithstanding that no distribution is made as mentioned in sub-paragraph (1) above.
- (3) For the purposes of this Chapter, an offshore fund shall be regarded as not pursuing a full distribution policy with respect to an account period for which the fund does not make up accounts.
- (4) For the purposes of this paragraph—
- (a) where a period for which an offshore fund makes up accounts includes the whole or part of two or more account periods of the fund, then, subject to paragraph (c) below, income shown in those accounts shall be apportioned between those account periods on a time basis according to the number of days in each period which are comprised in the period for which the accounts are made up ;
- (b) where a distribution is made for a period which includes the whole or part of two or more account periods of the fund, then, subject to sub-paragraph (5) below, the distribution shall be apportioned between those account periods on a time basis according to the number of days in each period which are comprised in the period for which the distribution is made;
- (c) where a distribution is made out of specified income but is not made for a specified period, that income shall be attributed to the account period of the fund in which it in fact arose and the distribution shall be treated as made for that account period ; and
- (d) where a distribution is made neither for a specified period nor out of specified income, then, subject to sub-paragraph (5) below, it shall be treated as made for the last account period of the fund which ended before the distribution was made.
- (5) If, apart from this sub-paragraph, the amount of a distribution made, or treated by virtue of sub-paragraph (4) above as made, for an account period would exceed the income of that period, then, for the purposes of this paragraph,—
- (a) if the amount of the distribution was determined by apportionment under sub-paragraph (4)(b) above, the excess shall be re-apportioned, as may be just and reasonable, to any other account period which, in whole or in part, falls within the period for which the distribution was made or, if there is more than one such period, between those periods ; and
- (b) subject to paragraph (a) above, the excess shall be treated as an additional distribution or series of additional distributions made for preceding account periods in respect of which the distribution or, as the case may be, the aggregate distributions would otherwise be less than the income of the period, applying the excess to later account periods before earlier ones, until it is exhausted.
- (6) In any case where—
- (a) for a period which is or includes an account period, an offshore fund is subject to any restriction as regards the making of distributions, being a restriction imposed by the law of any territory outside the United Kingdom, and
- (b) the fund is subject to that restriction by reason of an excess of losses over profits (applying the concepts of " profits " and " losses " in the sense in which and to the extent to which they are relevant for the purposes of the law in question),
then, in determining, for the purposes of the preceding provisions of this paragraph, the amount of the fund's income for that account period, there shall be allowed as a deduction any amount which, apart from this sub-paragraph, would form part of the income of the fund for that account period and which cannot be distributed by virtue of the restriction.
### Funds operating equalisation arrangements
##### 2
- (1) In the case of an offshore fund which throughout any account period operates equalisation arrangements, on any occasion in that period when there is a disposal to which this sub-paragraph applies, the fund shall be treated for the purposes of this Part of this Schedule as making a distribution of an amount equal to so much of the consideration for the disposal as, in accordance with this paragraph, represents income accrued to the date of the disposal.
- (2) Sub-paragraph (1) above applies to a disposal—
- (a) which is a disposal of a material interest in the offshore fund concerned; and
- (b) which is a disposal to which this Chapter applies (whether by virtue of subsection (3) of section 93 of this Act or otherwise) or is one to which this Chapter would apply if subsections (5) and (6) of that section applied generally and not only for the purpose of determining whether, by virtue of subsection (3) of that section, there is a disposal to which this Chapter applies; and
- (c) which is not a disposal with respect to which the conditions in subsection (4) of that section are fulfilled ; and
- (d) which is a disposal to the fund itself or to the persons concerned with the management of the fund (in this paragraph referred to as " the managers ") in their capacity as such.
- (3) On a disposal to which sub-paragraph (1) above applies, the part of the consideration which represents income accrued to the date of the disposal is, subject to sub-paragraph (4) and paragraph 4(4) below, the amount which would be credited to the equalisation account of the offshore fund concerned in respect of accrued income if, on the date of the disposal, the material interest which is disposed of were acquired by another person by way of initial purchase.
- (4) If, after the beginning of the period by reference to which the accrued income referred to in sub-paragraph (3) above is calculated, the material interest disposed of by a disposal to which sub-paragraph (1) above applies was acquired by way of initial purchase (whether or not by the person making the disposal), there shall be deducted from the amount which, in accordance with sub-paragraph (3) above, would represent income accrued to the date of the disposal, the amount which on that acquisition was credited to the equalisation account of the fund in respect of accrued income ; and if in that period there has been more than one such acquisition of that material interest by way of initial purchase, the deduction to be made under this sub-paragraph shall be the amount so credited to the equalisation account on the latest such acquisition prior to the disposal in question.
- (5) Where, by virtue of this paragraph, an offshore fund is treated for the purposes of this Part of this Schedule as making a distribution on the occasion of a disposal, the distribution shall be treated for those purposes—
- (a) as complying with paragraph 1(1)(d) above ; and
- (b) as made out of the income of the fund for the account period in which the disposal occurs ; and
- (c) as paid, immediately before the disposal, to the person who was then the holder of the interest disposed of.
- (6) In any case where—
- (a) a distribution in respect of an interest in an offshore fund is made to the managers of the fund, and
- (b) their holding of that interest is in their capacity as such, and
- (c) at the time of the distribution, the fund is operating equalisation arrangements,
the distribution shall not be taken into account for the purposes of paragraph 1(1) above except to the extent that the distribution is properly referable to that part of the period for which the distribution is made during which that interest has been held by the managers of the fund in their capacity as such.
- (7) Subsection (2) of section 93 applies for the purposes of this paragraph as it applies for the purposes of that section.
### Income taxable under Case IV or Case V of Schedule D
##### 3
- (1) Sub-paragraph (2) below applies if any sums which form part of the income of an offshore fund falling within paragraph (b) or paragraph (c) of subsection (1) of section 94 of this Act are of such a nature that—
- (a) the holders of interests in the fund who are either companies resident in the United Kingdom or individuals domiciled and resident there—
- (i) are chargeable to tax under Case IV or Case V of Schedule D in respect of such of those sums as are referable to their interests ; or
- (ii) if any of that income is derived from assets within the United Kingdom, would be so chargeable had the assets been outside the United Kingdom ; and
- (b) the holders of interests who are not such companies or individuals would be chargeable as mentioned in sub-paragraph (i) or sub-paragraph (ii) above if they were resident in the United Kingdom or, in the case of individuals, if they were domiciled and both resident and ordinarily resident there.
- (2) To the extent that sums falling within sub-paragraph (1) above do not actually form part of a distribution complying with paragraphs 1(1)(c) and 1(1)(d) above, they shall be treated for the purposes of this Part of this Schedule—
- (a) as a distribution complying with those paragraphs and made out of the income of which they form part; and
- (b) as paid to the holders of the interests to which they are referable.
### Commodity income
##### 4
- (1) To the extent that the income of an offshore fund for any account period includes profits from dealing in commodities, one half of those profits shall be left out of account in determining for the purposes of paragraphs 1(1)(b) above and 5 below—
- (a) the income of the fund for that period ; and
- (b) the fund's United Kingdom equivalent profits for that period;
but in any account period in which an offshore fund incurs a loss in dealing in commodities the amount of that loss shall not be varied by virtue of this paragraph.
- (2) In this paragraph, " dealing in commodities" shall be construed as follows—
- (a) " commodities " does not include currency, securities, debts or other assets of a financial nature but, subject to that, means tangible assets which are dealt with on a commodity exchange in any part of the world ; and
- (b) " dealing" includes dealing by way of futures contracts and traded options.
- (3) Where the income of an offshore fund for any account period consists of profits from dealing in commodities and other income then,—
- (a) in determining whether the condition in paragraph 1(1)(b) above is fulfilled with respect to that account period, the expenditure of the fund shall be apportioned in such manner as is just and reasonable between the profits from dealing in commodities and the other income ; and
- (b) in determining whether, and to what extent, any expenditure is deductible under section 304 of the Taxes Act (management expenses of investment companies) in computing the fund's United Kingdom equivalent profits for that period, so much of the business of the fund as does not consist of dealing in commodities shall be treated as a business carried on by a separate company.
- (4) Where there is a disposal to which sub-paragraph (1) of paragraph 2 above applies, then, to the extent that any amount which was or would be credited to the equalisation account in respect of accrued income, as mentioned in sub-paragraph (3) or sub-paragraph (4) of that paragraph, represents profits from dealing in commodities, one half of that accrued income shall be left out of account in determining under those sub-paragraphs the part of the consideration for the disposal which represents income accrued to the date of the disposal.
### United Kingdom equivalent profits
##### 5
- (1) Any reference in this Schedule to the United Kingdom equivalent profits of an offshore fund for an account period is a reference to the amount which, on the assumptions in sub-paragraph (3) below, would be the total profits of the fund for that period on which, after allowing for any deductions available against those profits, corporation tax would be chargeable.
- (2) In this paragraph the expression " profits " does not include chargeable gains.
- (3) The assumptions referred to in sub-paragraph (1) above are—
- (a) that the offshore fund is a company which, in the account period in question, but not in any other account period, is resident in the United Kingdom ; and
- (b) that the account period is an accounting period of that company ; and
- (c) that any dividends or distributions which, by virtue of section 239 of the Taxes Act (dividends and distributions of companies resident in the United Kingdom), should be left out of account in computing income for corporation tax purposes are nevertheless to be brought into account in that computation in like manner as if they were dividends or distributions of a company resident outside the United Kingdom.
- (4) Without prejudice to any deductions available apart from this sub-paragraph, the deductions referred to in sub-paragraph (1) above include—
- (a) a deduction equal to any amount which, by virtue of paragraph 1(6) above, is allowed as a deduction in determining the income of the fund for the account period in question; and
- (b) a deduction equal to any amount of tax (paid under the law of a territory outside the United Kingdom) which was taken into account as a deduction in determining the income of the fund for the account period in question but which, because it is referable to capital rather than income, does not fall to be taken into account by virtue of section 516 of the Taxes Act.
- (5) For the avoidance of doubt it is hereby declared that, if any sums forming part of the offshore fund's income for any period have been received by the fund without any deduction of or charge to tax by virtue of section 99 or section 100 of the Taxes Act (securities held by non-residents), the effect of the assumption in sub-paragraph (3)(a) above is that those sums are to be brought into account in determining the total profits referred to in sub-paragraph (1) above.
## PART II — Modifications of Conditions For Certification in Certain Cases
### Exclusion of investments in distributing offshore funds
##### 6
- (1) In any case where—
- (a) in an account period of an offshore fund (in this Part of this Schedule referred to as the " primary fund"), the assets of the fund consist of or include interests in another offshore fund, and
- (b) those interests (together with other interests which the primary fund may have) are such that, by virtue of paragraph (a) of subsection (3) of section 95 of this Act or, if the other fund concerned is a company, by virtue of paragraph (b) or paragraph (c) of that subsection, the primary fund could not, apart from this paragraph, be certified as a distributing fund in respect of that account period, and
- (c) without regard to the provisions of this paragraph, that other fund could be certified as a distributing fund in respect of its account period or, as the case may be, each of its account periods which comprises the whole or any part of the account period of the primary fund,
then, in determining whether anything in paragraphs (a) to (c) of the said subsection (3) prevents the primary fund being certified as mentioned in paragraph (b) above, the interests of the primary fund in that other fund shall be left out of account except for the purpose of determining the total value of the assets of the primary fund.
- (2) In this Part of this Schedule an offshore fund falling within sub-paragraph (1)(c) above is referred to as a " qualifying fund".
- (3) In a ease falling within sub-paragraph (1) above—
- (a) paragraphs (a) to (c) of subsection (3) of section 95 of this Act shall have effect in relation to the primary fund with the modification in paragraph 7 below (in addition to that provided for by sub-paragraph (1) above); and
- (b) Part I of this Schedule shall have effect in relation to the primary fund with the modification in paragraph 8 below.
##### 7
The modification referred to in paragraph 6(3)(a) above is that, in any case where—
- (a) at any time in the account period referred to in paragraph 6(1) above, the assets of the primary fund include an interest in an offshore fund or in any company (whether an offshore fund or not), and
- (b) that interest falls to be taken into account in determining whether anything in paragraphs (a) to (c) of subsection (3) of section 95 of this Act prevents the primary fund being certified as a distributing fund in respect of that account period, and
- (c) at any time in that account period the assets of the qualifying fund include an interest in the offshore fund or company referred to in paragraph (a) above,
for the purpose of the application in relation to the primary fund of the provisions referred to in paragraph (b) above, at any time when the assets of the qualifying fund include the interest referred to in paragraph (c) above, the primary fund's share of that interest shall be treated as an additional asset of the primary fund.
##### 8
- (1) The modification referred to in paragraph 6(3)(b) above is that, in determining whether the condition in paragraph 1(1)(b)(ii) above is fulfilled with respect to the account period of the primary fund referred to in paragraph 6(1) above, the United Kingdom equivalent profits of the primary fund for that period shall be treated as increased by the primary fund's share of the excess income (if any) of the qualifying fund which is attributable to that period.
- (2) For the purposes of this paragraph, the excess income of the qualifying fund for any account period of that fund is the amount (if any) by which its United Kingdom equivalent profits for that account period exceed the amount of the distributions made for that period, as determined for the purposes of the application of paragraph 1(1) above to the qualifying fund.
- (3) If an account period of the qualifying fund coincides with an account period of the primary fund, then the excess income (if any) of the qualifying fund for that period is the excess income which is attributable to that period of the primary fund.
- (4) In a case where sub-paragraph (3) above does not apply, the excess income of the qualifying fund which is attributable to an account period of the primary fund is the appropriate fraction of the excess income (if any) of the qualifying fund for any of its account periods which comprises the whole or any part of the account period Of the primary fund and, if there is more than one such account period of the qualifying fund, the aggregate of the excess income (if any) of each of them.
- (5) For the purposes of sub-paragraph (4) above, the appropriate fraction is that of which—
- (a) the numerator is the number of days in the account period of the primary fund which are also days in an account period of the qualifying fund ; and
- (b) the denominator is the number of days in that account period of the qualifying fund or, as the case may be, in each of those account periods of that fund which comprises the whole or any part of the account period of the primary fund.
##### 9
- (1) The references in paragraphs 7 and 8(1) above to the primary fund's share of—
- (a) an interest forming part of the assets of the qualifying fund, or
- (b) the excess income (as defined in paragraph 8 above) of the qualifying fund,
shall be construed as references to the fraction specified in sub-paragraph (2) below of that interest or excess income.
- (2) In relation to any account period of the primary fund, the fraction referred to in sub-paragraph (1) above is that of which—
- (a) the numerator is the average value of the primary fund's holding of interests in the qualifying fund during that period; and
- (b) the denominator is the average value of all the interests in the qualifying fund held by any persons during that period.
### Offshore funds investing in trading companies
##### 10
- (1) In any case where the assets of an offshore fund for the time being include an interest in a trading company, as defined in sub-paragraph (2) below, the provisions of subsection (3) of section 95 of this Act nave effect subject to the modifications in sub-paragraphs (3) and (4) below.
- (2) In this paragraph " trading company " means a company whose business consists wholly of the carrying on of a trade or trades and does not to any extent consist of—
- (a) dealing in commodities, as defined in paragraph 4(2) above, or dealing, as so defined, in currency, securities, debts or other assets of a financial nature ; or
- (b) banking or money-lending.
- (3) In the application of section 95(3)(b) of this Act to so much of the assets of an offshore fund as for the time being consists of interests in a single trading company, for the words " 10 per cent. " there shall be substituted the words " 20 per cent. "
- (4) In the application of section 95(3)(c) of this Act to an offshore fund the assets of which for the time being include any issued share capital of a trading company or any class of that share capital, for the words " more than 10 per cent." there shall be substituted the words " 50 per cent. or more ".
### Offshore funds with wholly-owned subsidiaries dealing in commodities
##### 11
- (1) In relation to an offshore fund which has a wholly-owned subsidiary—
- (a) which is a company, and
- (b) the business of which consists wholly or mainly of dealing in commodities, as defined in paragraph 4(2) above,
the provisions of subsection (3) of section 95 of this Act and Part I of this Schedule have effect subject to the modifications in sub-paragraph (3) below.
- (2) For the purposes of this paragraph, a company is a wholly-owned subsidiary of an offshore fund if and so long as the whole of the issued share capital of the company is,—
- (a) in the case of an offshore fund falling within section 94(1)(a) of this Act, directly and beneficially owned by the fund ; and
- (b) in the case of an offshore fund falling within section 94(1)(b) of this Act, directly owned by the trustees of the fund for the benefit of the fund ; and
- (c) in the case of an offshore fund falling within section 94(1)(c) of this Act, owned in a manner which, as near as may be, corresponds either to paragraph (a) or paragraph (b) above.
- (3) The modifications referred to in sub-paragraph (1) above are that, for the purposes of the provisions referred to in that sub-paragraph,—
- (a) the receipts, expenditure, assets and liabilities of the subsidiary shall be regarded as the receipts, expenditure, assets and liabilities of the fund ; and
- (b) there shall be left out of account the interest of the fund in the subsidiary and any distributions or other payments made by the subsidiary to the fund or by the fund to the subsidiary.
### Offshore funds with interests in dealing and management companies
##### 12
- (1) Section 95(3)(c) of this Act shall not apply to so much of the assets of an offshore fund as consists of issued share capital of a company which is either—
- (a) a wholly-owned subsidiary of the fund which falls within sub-paragraph (2) below, or
- (b) a subsidiary management company of the fund, as defined in sub-paragraph (3) below.
- (2) A company which is a wholly-owned subsidiary of an offshore fund is one to which sub-paragraph (1)(a) above applies if—
- (a) the business of the company consists wholly of dealing in material interests in the offshore fund for the purposes of and in connection with the management and administration of the business of the fund ; and
- (b) the company is not entitled to any distribution in respect of any material interest for the time being held by it;
and paragraph 11(2) above shall apply to determine whether a company is, for the purposes of this paragraph, a wholly-owned subsidiary of an offshore fund.
- (3) A company in which an offshore fund has an interest is for the purposes of sub-paragraph (1)(b) above a subsidiary management company of the fund if—
- (a) the company carries on no business other than providing services falling within sub-paragraph (4) below either for the fund alone or for the fund and for any other offshore fund which has an interest in the company ; and
- (b) the company's remuneration for the services which it provides to the fund is not greater than it would be if it were determined at arm's length between the fund and a company in which the fund has no interest.
- (4) The services referred to in sub-paragraph (3) above are—
- (a) holding property (of any description) which is occupied or used in connection with the management or administration of the fund ; and
- (b) providing administrative, management and advisory services to the fund.
- (5) In determining, in accordance with sub-paragraph (3) above, whether a company in which an offshore fund has an interest is a subsidiary management company of that fund,—
- (a) every business carried on by a wholly-owned subsidiary of the company shall be treated as carried on by the Company ; and
- (b) no account shall be taken of so much of the company's business as Consists of holding its interests in a wholly-owned Subsidiary; and
- (c) any reference in sub-paragraph (3)(b) above to the company shall be taken to include a reference to a wholly-owned subsidiary of the company.
- (6) Any reference in sub-paragraph (5) above to a wholly-owned subsidiary of a company is a reference to another company the whole of the issued share capital of which is for the time being directly and beneficially owned by the first company.
## PART III — Certification Procedure
### Application for Certification
##### 13
- (1) The Board shall, in such manner as they think appropriate, certify an offshore fund as a distributing fund in respect of an account period if—
- (a) an application in respect of that period is made under this paragraph; and
- (b) the application is accompanied by the accounts of the fund for, or for a period which includes, the account period to which the application relates ; and
- (c) there is furnished to the Board such information as they may reasonably require for the purpose of determining whether the fund should be so certified ; and
- (d) they are satisfied that nothing in subsection (2) or subsection (3) of section 95 of this Act prevents the fund being so certified.
- (2) An application under this paragraph shall be made to the Board by the fund or by a trustee or officer thereof on behalf of the fund and may be so made—
- (a) before the expiry of the period of six months beginning at the end of the account period to which the application relates; or
- (b) if it is later, before 1st January 1985 ; or
- (c) at Such later time as the Board may in any particular case allow.
- (3) In any case where, on an application under this paragraph, the Board determine that the offshore fund concerned should not be certified as a dittoing fund in respect of the account period to which the application relates, they shall give notice in writing of that fact to the fund.
- (4) If at any time it appears to the Board that the accounts accompanying an application under this paragraph in respect of any account period of an offshore fund or any information furnished to the Board in connection with such an application is or are not such as to make full and accurate disclosure of all facts and considerations relevant to the application, they shall give notice to the fund accordingly, specifying the period concerned.
- (5) Where a notice is given by the Board under sub-paragraph (4) above, any certification by them in respect of the account period in question shall be void.
### Appeals
##### 14
- (1) An appeal to the Special Commissioners—
- (a) against such a determination as is referred to in paragraph 13(3) above, or
- (b) against a notification under paragraph 13(4) above,
may be made by the offshore fund or by a trustee or officer thereof on behalf of the fund, and shall be so made by notice in writing specifying the grounds of appeal and given to the Board within 90 days of the date of the notice under paragraph 13(3) or, as the ease may be, paragraph 13(4) above.
- (2) The jurisdiction of the Special Commissioners on an appeal under this paragraph shall include jurisdiction to review any decision of the Board which is relevant to a ground of the appeal.
## PART IV — Supplementary
### Assessment: effect of non-certification
##### 15
No appeal may be brought against an assessment to tax on the ground that an offshore fund should have been certified as a distributing fund in respect of an account period of the fund.
##### 16
- (1) Without prejudice to paragraph 15 above, in any case where no application has been made under paragraph 13 above in respect of an account period of an offshore fund, any person who is assessed to tax for which he would not be liable if the offshore fund were certified as a distributing fund in respect of that period may by notice in writing require the Board to take action under this paragraph with a view to determining whether the fund should be so certified.
- (2) Subject to sub-paragraphs (3) and (5) below, if the Board receive a notice under sub-paragraph (1) above, they shall, by notice in writing, invite the offshore fund concerned to make an application under paragraph 13 above in respect of the period in question.
- (3) Where sub-paragraph (2) above applies, the Board shall not be required to give notice under that sub-paragraph before the expiry of the account period to which the notice is to relate nor if an application under paragraph 13 above has already been made; but where notice is given under that sub-paragraph, an application under paragraph 13 above shall not be out of time under paragraph 13(2)(a) or paragraph 13(2)(b) above if it is made within 90 days of the date of that notice.
- (4) If an offshore fund to which notice in writing is given under sub-paragraph (2) above does not, within the time allowed by sub-paragraph (3) above or, as the case may be, paragraph 13(2)(a) or paragraph 13(2)(b) above, make an application under paragraph 13 above in respect of the account period in question, the Board shall proceed to determine the question of certification in respect of that period as if such an application had been made.
- (5) Where the Board receive more than one notice under sub-paragraph (1) above with respect to the same account period of the same offshore fund, their obligations under sub-paragraphs (2) and (4) above shall be taken to be fulfilled with respect to each of those notices if they are fulfilled with respect to any one of them.
- (6) Notwithstanding anything in sub-paragraph (5) above, for the purpose of a determination under sub-paragraph (4) above with respect to an account period of an offshore fund, the Board shall have regard to accounts and other information furnished by all persons who have given notice under sub-paragraph (1) above with respect to that account period ; and paragraph 13 above shall apply as if accounts and information so furnished had been furnished in compliance with sub-paragraph (1) of that paragraph.
- (7) Without prejudice to sub-paragraph (5) above, in any case where—
- (a) at a time after the Board have made a determination under sub-paragraph (4) above that an offshore fund should not be certified as a distributing fund in respect of an account period, notice is given under sub-paragraph (1) above with respect to that period, and
- (b) the person giving that notice furnishes the Board with accounts or information which had not been furnished to the Board at the time of the earlier determination,
the Board shall reconsider their previous determination in the light of the new accounts or information and, if they consider it appropriate, may determine to certify the fund accordingly.
- (8) Where any person has given notice to the Board under sub-paragraph (1) above with respect to an account period of an offshore fund and no application has been made under paragraph 13 above with respect to that period,—
- (a) the Board shall notify that person of their determination with respect to certification under sub-paragraph (4) above ; and
- (b) paragraph 14 above shall not apply in relation to that determination.
### Postponement of tax pending determination of question as to certification
##### 17
- (1) In any case where—
- (a) an application has been made under paragraph 13 above with respect to an account period of an offshore fund and that application has not been finally determined, or
- (b) paragraph (a) above does not apply but notice has been given under paragraph 16(1) above in respect of an account period of an offshore fund and the Board have not yet given notice of their decision as to certification under paragraph 16(4) above,
any person who has been assessed to tax and considers that, if the offshore fund were to be certified as a distributing fund in respect of the account period in question, he would be overcharged to tax by the assessment may, by notice in writing given to the inspector within 30 days after the date of the issue of the notice of assessment, apply to the General Commissioners for a determination of the amount of tax the payment of which should be postponed pending the determination of the question whether the fund should be so certified.
- (2) A notice of application under sub-paragraph (1) above shall state the amount in which the applicant believes that he is overcharged to tax and his grounds for that belief.
- (3) Subsections (3A) onwards of section 55 of the Taxes Management Act 1970 (recovery of tax not postponed) shall apply with any necessary modifications in relation to an application under sub-paragraph (1) above as if it were an application under subsection (3) of that section and as if the determination of the question as to certification (whether by the Board or on appeal) were the determination of an appeal.
### Information as to decisions on certification etc.
##### 18
No obligation as to the secrecy imposed by statute or otherwise shall preclude the Board or an inspector from disclosing to any person appearing to have an interest in the matter—
- (a) any determination of the Board or (on appeal) the Special Commissioners whether an offshore fund should or should not be certified as a distributing fund in respect of any account period; or
- (b) the content and effect of any notice given by the Board under paragraph 13(4) above.
## SCHEDULE 20
## PART I — Disposals of Interests in Non-Qualifying Funds
### Interpretation
##### 1
In this Part of this Schedule—
- " the principal Act" means the Capital Gains Tax Act 1979 ;
- " the principal section " means section 96 of this Act; and
- "material disposal" means a disposal to which Chapter VII of Part II of this Act applies, otherwise than by virtue of section 93(3) of this Act.
### Calculation of unindexed gain
##### 2
- (1) Where there is a material disposal, there Shall first be determined for the purposes of this Part of this Schedule the amount (if any) which, in accordance with the provisions of this paragraph, is the unindexed gain accruing to the person making the disposal.
- (2) Subject to subsections (3) to (6) of section 92 of this Act and paragraph 3 below, the unindexed gain accruing on a material disposal is the amount which would be the gain on that disposal for the purposes of the principal Act if it were computed—
- (a) without regard to any charge to income tax or corporation tax by virtue of the principal section; and
- (b) without regard to any indexation allowance on the disposal under Chapter III of Part III of the Finance Act 1982.
##### 3
- (1) if the amount of any chargeable gain or allowable loss which (apart from section 98 of this Act) would accrue on the material disposal would fall to be determined in a way which, in whole or in part, would take account of the indexation allowance on an earlier disposal to which paragraph 2 of Schedule 13 to the Finance Act 1982 applies (disposals on a no-gain/no-loss basis), the unindexed gain on the material disposal shall be computed as if—
- (a) no indexation allowance had been available on any such earlier disposal; and
- (b) subject to that, neither a gain nor a loss had accrued to the person making such an earlier disposal.
- (2) If the material disposal forms part of a transfer to which Section 123 of the principal Act applies (roll-over relief on transfer of business), the unindexed gain accruing on the disposal Shall be computed without regard to any deduction which falls to be made under that section in computing a chargeable gain.
- (3) If the material disposal is made otherwise than under a bar-gam at arm's length and a claim for relief is made in respect of that disposal under section 79 of the Finance Act 1980 (relief for gifts), that section shall not affect the computation of the unindexed gain accruing on the disposal.
- (4) Where, in the case of an insurance company carrying on life assurance business, a profit arising from general annuity business and attributable to a material disposal falls (or would but for section 99(2) of this Act fall) to be taken into account in the computation under section 312 of the Taxes Act (general annuity business and pension business: separate charge on profits), the unindexed gain, if any, accruing to the company on the disposal shall be computed as if section 31(1) of the principal Act (computation of chargeable gains: exclusion of sums taken into account in computing income) did not apply.
- (5) Notwithstanding section 29 of the principal Act (losses to be determined in like manner as gains) if, apart from this sub-paragraph, the effect of any computation under the preceding provisions of this Part of this Schedule would be to produce a loss, the unindexed gain on the material disposal shall be treated as nil; and, accordingly, for the purposes of this Part of this Schedule no loss shall be treated as accruing on a material disposal.
- (6) Section 323 of the Taxes Act (interpretation of Chapter II of Part XII of that Act) has effect in relation to sub-paragraph (4) above as if it were included in that Chapter.
### Gains since 1st January 1984
##### 4
- (1) This paragraph applies where—
- (a) the interest in the offshore fund which is disposed of by the person making a material disposal was acquired by him before 1st January 1984 ; or
- (b) he is treated by virtue of any provisions of sub-paragraphs (3) and (4) below as having acquired the interest before that date.
- (2) Where this paragraph applies, there shall be determined for the purposes of this Part of this Schedule the amount which would have been the gain on the material disposals—
- (a) on the assumption that, on 1st January 1984, the interest was disposed of and immediately reacquired for a consideration equal to its market value at that time ; and
- (b) subject to that, on the basis that the gain is computed In like manner as, under paragraphs 2 and 3 above, the unindexed gain on the material disposal is determined ;
and that amount is in paragraph 5 below referred to as the " post'. 1983 gain " on the material disposal.
- (3) Where the person making the material disposal acquired the interest disposed of on or after 1st January 1984 and in such circumstances that, by virtue of any enactment other than section 86(5) of or Schedule 13 to the Finance Act 1982 (indexation provisions), he and the person from whom he acquired it (in this sub-paragraph and sub-paragraph (4) below referred to as " the previous owner ") fell to be treated for the purposes of the principal Act as if his acquisition were for a consideration of such an amount as would secure that, on the disposal under which he acquired it, neither a gain nor a loss accrued to the previous owner, the previous owner's acquisition of the interest shall be treated as his acquisition of it.
- (4) If the previous owner acquired the interest disposed of on or after 1st January 1984 and in circumstances similar to those referred to in sub-paragraph (3) above, his predecessor's acquisition of the interest shall be treated for the purposes of this paragraph as the previous owner's acquisition, and so on back through previous acquisitions in similar circumstances until the first such acquisition before 1st January 1984 or, as the case may be, until an acquisition on a material disposal on or after that date.
### The offshore income gain
##### 5
- (1) Subject to sub-paragraph (2) below, a material disposal gives rise to an offshore income gain of an amount equal to the unindexed gain on that disposal.
- (2) In any case where—
- (a) paragraph 4 above applies, and
- (b) the post-1983 gain on the material disposal is less than the unindexed gain on the disposal,
the offshore income gain to which the disposal gives rise is an amount equal to the post-1983 gain.
## PART II — Disposals Involving an Equalisation Element
##### 6
- (1) Subject to paragraph 7 below, a disposal to which Chapter VII of Part II of this Act applies by virtue of section 93(3) of this Act gives rise to an offshore income gain of an amount equal to the equalisation element relevant to the asset disposed of.
- (2) Subject to sub-paragraphs (4) to (6) below, the equalisation element relevant to the asset disposed of by a disposal falling within sub-paragraph (1) above is the amount which would be credited to the equalisation account of the offshore fund concerned in respect of accrued income if, on the date of the disposal, the asset which is disposed of were acquired by another person by way of initial purchase.
- (3) In the following provisions of this Part of this Schedule, a disposal falling within sub-paragraph (1) above is referred to as a " disposal involving an equalisation element".
- (4) Where the asset disposed of by a disposal involving an equalisation element was acquired by the person making the disposal after the beginning of the period by reference to which the accrued income referred to in sub-paragraph (2) above is calculated, the amount which, apart from this sub-paragraph, would be the equalisation element relevant to that asset shall be reduced by the following amount, that is to say,—
- (a) if that acquisition took place on or after 1st January 1984, the amount which, on that acquisition, was credited to the equalisation account of the offshore fund concerned in respect of accrued income or, as the case may be, would have been so credited if that acquisition had been by way of initial purchase ; and
- (b) in any other case, the amount which would have been credited to that account in respect of accrued income if that acquisition had been an acquisition by way of initial purchase taking place on 1st January 1984.
- (5) In any case where—
- (a) the asset disposed of by a disposal involving an equalisation element was acquired by the person making the disposal at or before the beginning of the period by reference to which the accrued income referred to in sub-paragraph (2) above is calculated, and
- (b) that period began before 1st January 1984 and ends after that date,
the amount which, apart from this sub-paragraph, would be the equalisation element relevant to that asset shall be reduced by the amount which would have been credited to the equalisation account of the offshore fund concerned in respect of accrued income if the acquisition referred to in paragraph (a) above had been an acquisition by way of inital purchase taking place on 1st January 1984.
- (6) Where there is a disposal involving an equalisation element, then, to the extent that any amount which was or would be credited to the equalisation account of the offshore fund in respect of accrued income, as mentioned in any of sub-paragraphs (2) to (5) above, represents profits from dealing in commodities, within the meaning of paragraph 4 of Schedule 19 to this Act, one half of that accrued income shall be left out of account in determining under those sub-paragraphs the equalisation element relevant to the asset disposed of by that disposal.
##### 7
- (1) For the purposes of this Part of this Schedule, there shall be determined, in accordance with paragraph 8 below, the Part I gain (if any) on any disposal involving an equalisation element.
- (2) Notwithstanding anything in paragraph 6 above,—
- (a) if there is no Part I gain on a disposal involving an equalisation element, that disposal shall not give rise to an offshore income gain ; and
- (b) if, apart from this paragraph, the offshore income gain on a disposal involving an equalisation element would exceed the Part I gain on that disposal, the offshore income gain to which that disposal gives rise shall be reduced to an amount equal to that Part I gain.
##### 8
- (1) On a disposal involving an equalisation element, the Part I gain is the amount (if any) which, by virtue of Part I of this Schedule (as modified by the following provisions of this paragraph), would be the offshore income gain on that disposal if it were a material disposal within the meaning of that Part.
- (2) For the purposes only of the application of Part I of this Schedule to determine the Part I gain (if any) on a disposal involving an equalisation element, subsections (5) and (6) of section 93 of this Act shall have effect as if, in subsection (5), the words " by virtue of subsection (3) above " were omitted,
- (3) If a disposal involving an equalisation element is one which, by virtue of any enactment other than section 86(5)(b) of or Schedule 13 to the Finance Act 1982 (indexation), is treated tor the purposes of the Capital Gains Tax Act 1979 as one on which neither a gain nor a loss accrues to the person making the disposal, then, for the purpose only of determining the Part I gain (if any) on the disposal, that enactment shall be deemed not to apply to it (but without prejudice to the application of that enactment to any earlier disposal).
- (4) In any case where a disposal involving an equalisation element is made by a company which has made an election under Schedule 6 to the Finance Act 1983 (indexation: election for pooling) and the asset disposed of consists of or includes securities which, by virtue of paragraph 3(3) of that Schedule, are to be regarded for the purposes of the principal Act as a single asset or part of a single asset, then, for the purpose only of determining the Part I gain (if any) on the disposal,—
- (a) the reference in paragraph 2(2)(b) above to an indexation allowance under Chapter III of Part III of the Finance Act 1982 shall be construed as including a reference to an indexation allowance under Schedule 6 to the Finance Act 1983; and
- (b) if some of the securities comprised in the asset disposed of were acquired by the company making the disposal before 1st January 1984 and some were not, paragraph 4(2) above shall not apply and paragraph 5 above shall have effect with the omission of sub-paragraph (2) (and the reference to that sub-paragraph in sub-paragraph (1)).
- (5) The reference in sub-paragraph (4)(b) above to securities acquired before 1st January 1984 includes a reference to securities which, by virtue of any provisions of paragraph 4 above, are treated as so acquired.
## SCHEDULE 21
### The Finance Act 1975
##### 1
In section 22(4) of the Finance Act 1975 (in this Schedule referred to as " the 1975 Act ")—
- (a) for the words from the beginning to " his death " there shall be substituted the words " In determining for the purposes of this Part of this Act the value of the estate, immediately before his death, of a person whose spouse (or former spouse) died before 13th November 1974 "; and
- (b) for the words "that death" there shall be substituted the words " the later death ".
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 2
@@ -7150,22 +5871,7 @@
##### 18
- (1) Section 34 of the Development Land Tax Act 1976 shall be amended as follows.
- (2) In subsection (3), for paragraph (d) there shall be substituted the following paragraph—
> (d) ' a CTT transfer' means an event which is—
> (i) a transfer of value, for the purposes of capital transfer tax, giving rise to liability for that tax,
> (ii) an occasion on which capital transfer tax is chargeable under Chapter II of Part IV of the Finance Act 1982, or
> (iii) a capital distribution (within the meaning of section 51(1) of the Finance Act 1975 as it has effect in relation to events before 9th March 1982),
> and on the occurrence of which an interest in land is acquired by any person.
- (3) For subsection (5) there shall be substituted the following subsection—
> (5) In any case where the whole or any part of the land in which the interest referred to in paragraph (d) of subsection (3) above subsists—
> (a) is designated under section 77 of the Finance Act 1976 (conditional exemption) in relation to a conditionally exempt transfer (as defined in section 76 of that Act) made on a death, or
> (b) is designated as property to which section 34 of the Finance Act 1975 applies (conditional exemption on death before 7th April 1976),
> it shall be assumed for the purpose only of determining whether the transfer of value in question falls within sub-paragraph (i) of subsection (3)(d) above that the transfer of value was not a conditionally exempt transfer or, as the case may be, that section 34 of the Finance Act 1975 never applied to the property.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 19
@@ -7179,7 +5885,7 @@
##### 20
In section 76(3)(b) of the Finance Act 1976, the words from " or the value " to the end shall cease to have effect.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 21
@@ -7222,11 +5928,11 @@
For section 4 of the Taxes Management Act 1970 (appointment of Special Commissioners) there shall be substituted—
> (4)
> (1) The Lord Chancellor shall, after consultation with the Lord Advocate, appoint such persons as he thinks fit as " Commissioners for the special purposes of the Income Tax Acts" (in the Taxes Acts referred to as " Special Commissioners ") and shall designate one of the Special Commissioners as the Presiding Special Commissioner.
> (2) No person shall be appointed under subsection (1) above unless he is a barrister, advocate or solicitor of not less than ten years' standing.
> (1) The Lord Chancellor shall, after consultation with the Lord Advocate, appoint such persons as he thinks fit as “Commissioners for the special purposes of the Income Tax Acts" (in the Taxes Acts referred to as “Special Commissioners") and shall designate one of the Special Commissioners as the Presiding Special Commissioner.
> (2) No person shall be appointed under subsection (1) above unless he is a barrister, advocate or solicitor of not less than ten years’ standing.
> (3) If the Presiding Special Commissioner is temporarily absent or unable to act or there is a vacancy in his office, the Lord Chancellor may designate another Special Commissioner to act as deputy Presiding Special Commissioner and the Commissioner so designated shall, when so acting, have all the functions of the Presiding Special Commissioner.
> (4) The Lord Chancellor may, if he thinks fit, and after consultation with the Lord Advocate, remove a Special Commissioner from office on the grounds of incapacity or misbehaviour.
> (5) By virtue of their appointment the Special Commissioners shall have authority to execute such powers, and to perform such duties, as are assigned to them by any enactment
> (5) By virtue of their appointment the Special Commissioners shall have authority to execute such powers, and to perform such duties, as are assigned to them by any enactment.
> (6) Such sums shall be allowed to Special Commissioners in respect of salary and incidental expenses and such pensions (including allowances and gratuities) shall be paid to, or in respect of, them as the Lord Chancellor may, with the approval of the Treasury, determine.
> (7) Officers and staff may be appointed under section 27 of the Courts Act 1971 (court staff) for carrying out the administrative work of the Special Commissioners.
> (4A)
@@ -7234,7 +5940,7 @@
> (2) A person shall not be qualified for appointment as a deputy Special Commissioner unless he is qualified for appointment as a Special Commissioner.
> (3) A deputy Special Commissioner while acting under this section shall have all the jurisdiction and functions of a Special Commissioner and any reference to a Special Commissioner in the following provisions of this Act or in any other enactment or any instrument made under any enactment (whenever passed or made) shall include a reference to a deputy Special Commissioner.
> (4) The duty under section 6(1) below shall only apply to a deputy Special Commissioner on his first appointment to that office.
> (5) Notwithstanding the expiry of any period for which a person is appointed under this section, he may continue to act under the appointment for the purpose of continuing to deal with any matter with winch he was concerned during that period.
> (5) Notwithstanding the expiry of any period for which a person is appointed under this section, he may continue to act under the appointment for the purpose of continuing to deal with any matter with which he was concerned during that period.
> (6) The Lord Chancellor may pay to any person appointed under this section such remuneration and allowances as he may, with the approval of the Treasury, determine.
### Special Commissioners: quorum
@@ -7243,9 +5949,9 @@
- (1) Section 45 of the Act of 1970 (quorum of Special Commissioners) shall be amended as follows.
- (2) In subsection (1), for the word " may " there shall be substituted the words " shall, except in any case where the Presiding Special Commissioner directs otherwise, " and the words "or any two or more Special Commissioners " shall be omitted.
- (3) In subsection (3), after the word "brought" there shall be inserted the words " , in accordance with a direction of the Presiding Special Commissioner ".
- (2) In subsection (1), for the word “may" there shall be substituted the words “ shall, except in any case where the Presiding Special Commissioner directs otherwise, ” and the words “or any two or more Special Commissioners" shall be omitted.
- (3) In subsection (3), after the word “brought" there shall be inserted the words “ , in accordance with a direction of the Presiding Special Commissioner ”.
- (4) Subsections (2) and (4) to (6) shall be omitted.
@@ -7256,19 +5962,17 @@
- (1) In section 31 of the Act of 1970 (appeals against assessments) the following subsections shall be inserted after subsection (5)—
> (5A) An election under subsection (4) above shall be disregarded if—
> (a) the appellant and the inspector or other officer of the Board agree in writing, at any time before the determination of the appeal, that it is to be disregarded ; or
> (a) the appellant and the inspector or other officer of the Board agree in writing, at any time before the determination of the appeal, that it is to be disregarded; or
> (b) the General Commissioners have given a direction under subsection (5C) below and have not revoked it.
> (5B) At any time before the determination of an appeal in respect of which an election has been made under subsection (4) above, the inspector or other officer of the Board after giving notice to the appellant may refer the election to the General Commissioners.
> (5C) On any such reference the Commissioners shall, unless they are satisfied that the appellant has arguments to present or evidence to adduce on the merits of the appeal, direct that the election be disregarded.
> (5D) If, at any time after the giving of a direction under subsection (5C) above (but before the determination of the appeal) the General Commissioners are satisfied that the appellant has arguments to present or evidence to adduce on the merits of the appeal, they shall revoke the direction.
> (5E) Any decision to give a direction under subsection (5C) above or revoke such a direction under subsection (5D) above shall be final.
.
- (2) In Schedule 2 to the Act of 1970 (appeals against decisions on claims), in paragraph 1, the following sub-paragraphs shall be inserted after sub-paragraph (1)—
> (1A) An election under sub-paragraph (1) above shall be disregarded if—
> (a) the appellant and the inspector or other officer of the Board agree in writing, at any time before the determination of the appeal, that it is to be disregarded ; or
> (a) the appellant and the inspector or other officer of the Board agree in writing, at any time before the determination of the appeal, that it is to be disregarded; or
> (b) the General Commissioners have given a direction under sub-paragraph (1C) below and have not revoked it.
> (1B) At any time before the determination of an appeal in respect of which an election has been made under sub-paragraph (1) above, the inspector or other officer of the Board after giving notice to the appellant may refer the election to the General Commissioners.
> (1C) On any such reference the Commissioners shall, unless they are satisfied that the appellant has arguments to present or evidence to adduce on the merits of the appeal, direct that the election be disregarded.
@@ -7281,16 +5985,7 @@
##### 4
After section 57A of the Act of 1970 there shall be inserted the following section—
> (57B)
> (1) The Lord Chancellor may, with the consent of the Lord Advocate, make rules—
> (a) as to the procedure of the Special Commissioners and the procedure in connection with the bringing of matters before them ;
> (b) as to the time within which matters may be brought before the Special Commissioners ; and
> (c) providing for appeals which have been heard by the Special Commissioners in the absence of the appellant to be reheard,
> in such circumstances and subject to such conditions, as the rules may prescribe.
> (2) Rules under this section may make such consequential provision (including the amendment of any enactment or instrument made under any enactment) as the Lord Chancellor considers necessary.
> (3) Rules under this section shall be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Transfer of appeals from General to Special Commissioners
@@ -7299,8 +5994,8 @@
In section 44 of the Act of 1970 (jurisdiction of General Commissioners) the following subsection shall be inserted after subsection (3)—
> (3A) Where in any case (including one in which proceedings may be brought as mentioned in subsection (3) above)—
> (a) an appeal has been brought before the General Commissioners ; and
> (b) those Commissioners consider that, because of the complexity of the appeal or the length of time likely to be required for hearing it, the appeal should be brought before the Special Commissioners ;
> (a) an appeal has been brought before the General Commissioners; and
> (b) those Commissioners consider that, because of the complexity of the appeal or the length of time likely to be required for hearing it, the appeal should be brought before the Special Commissioners;
> the General Commissioners may, with the agreement of the Special Commissioners, and having considered any representations made to them by the parties, arrange for the transfer of the proceedings to the Special Commissioners.
.
@@ -7309,24 +6004,13 @@
##### 6
In section 56(3) of the Act of 1970 and paragraph 10(2) of Schedule 4 to the Finance Act 1975 (fee for statement of case for opinion of High Court) for " £1 " there shall be substituted " £25 ".
In section 56(3) of the Act of 1970 . . . (fee for statement of case for opinion of High Court) for “£1" there shall be substituted “ £25 ”.
### Statement of case from Special Commissioners to Court of Appeal
##### 7
In the Act of 1970, the following section shall be inserted after section 56 (statement of case for opinion of High Court)—
> (56A)
> (1) The Lord Chancellor may by order provide that—
> (a) in such classes of appeal in England and Wales as may be prescribed by the order; and
> (b) subject to the consent of the parties and to such other conditions as may be so prescribed ;
> a case stated by the Special Commissioners under section 56 above, for the opinion of the High Court, shall be referred to the Court of Appeal.
> (2) An order under this section—
> (a) may provide that section 56 above shall have effect, in relation to any appeal to which the order applies, with such modifications as may be specified in the order'; and
> (b) shall be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.
.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Saving
@@ -7336,33 +6020,33 @@
## SCHEDULE 23
## PART I — Made-Wine
## PART II — Gaming Machine Licence Duty
## PART III — Value Added Tax
## PART IV — Customs and Excise: Miscellaneous
## PART V — Income Tax and Corporation Tax: General
## PART VI — Income Tax: The Additional Rate
## PART VII — Foreign Earnings and Emoluments
## PART VIII — Capital Gains
## PART IX — Capital Transfer Tax
## PART X — Stamp Duty
## PART XI — National Insurance Surcharge
## PART XII — Development Land Tax
## PART XIII — Special and General Commissioners
## PART XIV — Miscellaneous
## Part I — Made-Wine
## Part II — Gaming Machine Licence Duty
## Part III — Value Added Tax
## Part IV — Customs and Excise: Miscellaneous
## PART V — INCOME TAX AND CORPORATION TAX: GENERAL
## PART VI — INCOME TAX: THE ADDITIONAL RATE
## PART VII — FOREIGN EARNINGS AND EMOLUMENTS
## PART VIII — CAPITAL GAINS
## Part IX — Capital Transfer Tax
## Part X — Stamp Duty
## Part XI — National Insurance Surcharge
## Part XII — Development Land Tax
## PART XIII — SPECIAL AND GENERAL COMMISSIONERS
## Part XIV — Miscellaneous
## Chapter I — Customs and Excise
@@ -7771,31 +6455,3 @@
[^c10407911]: Words substituted by [Income and Corporation Taxes Act 1988 (c. 1)](https://www.legislation.gov.uk/ukpga/1988/1), [Sch. 29 para. 32](https://www.legislation.gov.uk/ukpga/1988/1/schedule/29/paragraph/32)
[^c10408711]: [Sch. 6 Pt. II](https://www.legislation.gov.uk/ukpga/1984/43/schedule/6/part/II) (paras. 2–7) repealed by [Finance Act 1989 (c. 26)](https://www.legislation.gov.uk/ukpga/1989/26), [s. 187(1)](https://www.legislation.gov.uk/ukpga/1989/26/section/187/1), [Sch. 17 Pt. III](https://www.legislation.gov.uk/ukpga/1989/26/schedule/17/part/III) Note 2
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#### Local loans.
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These repeals do not affect licences granted for periods beginning before 1st October 1984.
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These repeals do not affect licences granted for periods beginning before 1st October 1984.
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#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Vehicles excise duty: recipients of mobility supplement.
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1984-07-26
Finance Act 1984
original version
Text at this date