Finance Act 1985

Part I — Customs and Excise and Value Added Tax

Chapter I — Customs and Excise

The rates of duty

Spirits, beer, wine, made-wine and cider

1

• (1) In section 5 of the Alcoholic Liquor Duties Act 1979 (excise duty on spirits) for “£15.48” there shall be substituted “£15.77”.

• (2) In section 36 of that Act (excise duty on beer) for “£24.00” and “£0.80” there shall be substituted “£25.80” and “£0.86” respectively.

• (3) For the Table of rates of duty in Schedule 1 to that Act (wine and made-wine) there shall be substituted the Table in Schedule 1 to this Act.

• (4) With respect to wine or made-wine imported into or produced in the United Kingdom on or after 29th July 1985, Schedule 1 to this Act shall have effect with the substitution—

• (a) for the words “of less than 15”, in each place where they occur, of the words “not exceeding 15”; and

• (b) for the words “of not less than 15” of the words “exceeding 15”.

• (5) In section 62(1) of that Act (excise duty on cider) for “£14.28” there shall be substituted “£15.80”.

• (6) This section and Schedule 1 to this Act shall be deemed to have come into force on 20th March 1985.

Tobacco products

2

Hydrocarbon oil

3

• (1) In section 6(1) of the Hydrocarbon Oil Duties Act 1979 (rates of duty on hydrocarbon oil) for “£0.1716” (light oil) and “£0.1448” (heavy oil) there shall be substituted “£0.1794” and “£0.1515” respectively.

• (2) This section shall be deemed to have come into force at 6 o’clock in the evening of 19th March 1985.

Vehicles excise duty

4

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

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

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

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

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

• (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

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

Other provisions

Blending of certain wines to constitute production of wine

5

• (1) In section 54 of the Alcoholic Liquor Duties Act 1979 (charge of excise duty on wine) at the end of subsection (3) there shall be inserted the following subsections:—

(3A) For the purposes of this Act, the process of blending or otherwise mixing two or more wines (in this subsection referred to as “the constituent wines”) constitutes the production of wine if— (a) the rate of duty applicable to one of the constituent wines is different from that applicable to the other or, as the case may be, at least one of the others; and (b) the rate of duty applicable to the wine which is the product of the blending or other mixing is higher than that which is applicable to at least one of the constituent wines; and (c) the blending or other mixing is with a view to dealing wholesale in the wine is the product thereof; and for the purposes of this subsection the rate of duty applicable to any wine is that which is or would be chargeable under subsection (1) above on its importation into the United Kindgom or, as the case may be, on its production as mentioned in paragraph (b) of that subsection. (3B) Where, by virtue of subsection (3A) above, wine is produced in the United Kingdom, duty shall be chargeable on that wine by virtue of paragraph (b) of subsection (1) above whether or not duty was previously charged on all or any of the constituent wines by virtue of paragraph (a) or paragraph (b) of that subsection; but nothing in this subsection shall affect the operation of any regulations under section 56 below giving relief from duty on wine so produced by reference to duty charged on all or any of the constituent wines.

• (2) Subsection (1) above has effect in relation to the blending or otherwise mixing of wines on or after 26th March 1985.

Miscellaneous amendments relating to spirits and beer

6

• (1) The Alcoholic Liquor Duties Act 1979 shall have effect subject to the amendments in Schedule 3 to this Act (being amendments relating to spirits and beer).

• (2) Paragraphs 3 and 4 of Schedule 3 to this Act shall come into operation on such day as the Commissioners of Customs and Excise may by order made by statutory instrument appoint; and a different day may be so appointed for each of those paragraphs.

Hydrocarbon oil: mixing etc.

7

• (1) Schedule 4 to this Act (which contains provisions about mixing hydrocarbon oil etc.) shall have effect.

• (2) That Schedule shall come into operation on such day as the Commissioners of Customs and Excise may by order made by statutory instrument appoint.

Gaming machine licence duty

8

• (1) The Betting and Gaming Duties Act 1981 (in this section referred to as “the 1981 Act”) shall have effect subject to the amendments in Part I of Schedule 5 to this Act, being amendments designed—

• (a) enable the type of gaming machine licence which may be granted and the amount of duty payable thereon to be determined by reference to the value of the maximum prize obtainable by a successful player of the machine; and

• (b) to extend to Northern Ireland the provisions of the 1981 Act relating to gaming machine licence duty.

• (2) Part II of Schedule 5 to this Act shall have effect for the purpose of extending to Northern Ireland certain subordinate legislation made under the 1981 Act.

• (3) Nothing in Schedule 5 to this Act has effect with respect to licences granted or to be granted for any period beginning before 1st October 1985.

• (4) In consequence of the extension to Northern Ireland referred to in subsection (1)(b) above, no gaming machine licence shall be issued under Part V of the Miscellaneous Transferred Excise Duties Act (Northern Ireland) 1972 in respect of any period beginning on or after 1st October 1985.

Vehicles excise duty: fees

9

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

Computer records etc.

10

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

Chapter II — Value Added Tax

Newspaper advertisements

Newspaper advertisements

11

Offences etc.

Offences and penalties in criminal proceedings

12

Civil penalties

Tax evasion: conduct involving dishonesty

13

Serious misdeclaration or neglect resulting in understatements or overclaims

14

Failures to notify and unauthorised issue of invoices

15

Breaches of walking possession agreements

16

Breaches of regulatory provisions

17

Interest, surcharges and supplements

Interest on tax etc. recovered or recoverable by assessment

18

The default surcharge

19

Repayment supplement in respect of certain delayed payments

20

Assessments, records and information

Assessment of amounts due by way of penalty, interest or surcharge

21

Assessments: time limits and supplementary assessments

22

Amendments of Schedule 7 to the principal Act

23

Appeals

Amendments of section 40 of the principal Act

24

Settling appeals by agreement

25

Certain appeals to lie directly to the Court of Appeal

26

Procedural rules governing appeals

27

Miscellaneous

Penalty for failure to comply with directions etc. of tribunal

28

Enforcement of certain decisions of tribunal

29

Appointments to and administration of tribunals

30

Insolvency

31

Refund of tax in cases of bad debts

32

Interpretation and construction of Chapter II

33

Part II — Income Tax, Corporation Tax and Capital Gains Tax

Chapter I — General

Charge of income tax for 1985-86

34

Rate of advance corporation tax for financial year 1985

35

The rate of advance corporation tax for the financial year 1985 shall be three-sevenths.

Personal reliefs

36

• (1) Section 24(5) of the Finance Act 1980 (increase of personal reliefs) shall not apply for the year 1985-86.

• (2) In section 8 of the Taxes Act (personal reliefs)—

• (a) in subsection (1)(a) (married) for " £3,155 " there shall be substituted " £3,455";

• (b) in subsections (1)(b) (single) and (2) (wife's earned in come relief) for " £2,005 " there shall be substituted " £2.205";

• (c) in subsection (1A) (age allowance) for "£3,955 " and "£2,490" there shall be substituted " £4,255 " and " £2,690 " respectively ; and

• (d) in subsection (1B) (income limit for age allowance) for " £8,100 " there shall be substituted " £8,800".

Relief for interest

37

• (1) For the year 1985-86 the qualifying maximum referred to in paragraphs 5(1) and 24(3) of Schedule 1 to the Finance Act 1974 (limit on relief for interest on certain loans for the purchase or improvement of land) shall be £30,000.

• (2) In paragraph 5 of Schedule 7 to the Finance Act 1982 (loans over the tax relief limit) in sub-paragraph (2) (which excludes interest on such loans unless the qualifying lender has given notice to bring them within the deduction scheme) after the word " unless " there shall be inserted—

(a) the loan is made on or after 6th April 1987 ; or (b)

.

• (3) In sub-paragraph (4) of the said paragraph 5 (interest on a limited loan can be relevant interest only to the extent that it qualifies for tax relief) for the words " notice has been given as mentioned in sub-paragraph (2) above" there shall be substituted " the condition in paragraph (a) or paragraph (b) of subparagraph (2) above is fulfilled".

• (4) In paragraph 14(2) of the said Schedule 7 (power by order to prescribe qualifying lenders for the purposes of the deduction scheme) for the words from " with effect" onwards there shall be substituted " with effect from such date as may be so specified".

Interest paid on deposits with banks etc.

38

• (1) Schedule 8 to the Finance Act 1984 (interest paid on deposits with banks etc.) shall be amended as follows.

• (2) In paragraph 2 (meaning of "deposit-taker"), for the word " section ", in paragraph (f) of sub-paragraph (1), there shall be substituted the word " sub-paragraph " and for subparagraph (2) there shall be substituted the following subparagraph—

(2) An order under sub-paragraph (1)(f) above may prescribe a person or class of person in relation to all relevant deposits or only in relation to relevant deposits of a kind specified in the order

.

• (3) In paragraph 3(2), after paragraph (a) (person beneficially entitled to interest must be an individual), there shall be inserted the following paragraph—

(ad) in Scotland, the person who is so entitled is a partnership all the partners of which are individuals ; or

.

• (4) In paragraph 3(3) (deposits which are not relevant deposits), the following paragraphs shall be inserted after paragraph (d)—

(dd) it is a general client account deposit; (ddd) it forms part of a premiums trust fund (within the meaning of paragraph 16 of Schedule 10 to the Taxes Act) of an underwriting member of Lloyd's

.

• (5) In paragraph 3, after sub-paragraph (4), there shall be inserted the following sub-paragraph—

(4A) A declaration under sub-paragraph (3)(h) shall be in such form as may be prescribed or authorised, and; contain such information as may reasonably be required, by the Board

.

• (6) In paragraph 3(8) (interpretation), the following definition shall be inserted after the definition of " appropriate person " —

• ' general client account deposit' means a deposit, held by the deposit-taker in a client account (other than one which is identified by the deposit-taker as one in which sums are held only for one or more particular clients of the person whose account it is) in respect of which that person is required by provision made under any enactment to make payments representing interest to some or all of the clients for whom, or on whose account, he received the sums deposited in the account

.

• (7) After paragraph 3 there shall be inserted the following paragraph—

(3A) (1) The Treasury may by order made by statutory instrument make amendments in this Schedule providing for deposits of a kind specified in the order to be or, as the case may be, not to be relevant deposits in relation to all deposit-takers or such deposit-takers or classes of deposit-taker as may be so specified. (2) The Board may by regulations made by statutory instrument make provision— (a) requiring any declaration under paragraph 3 (3)(h)(ii) above which does not give the address of the person making it, to be supported by a certificate given by the deposit-taker concerned— (i) in such form as may be prescribed or authorised by the Board ; and (ii) containing such information as may reasonably be required by the Board ; and (b) generally for giving effect to the principal section and this Schedule. (3) Any order or regulations made under this paragraph may contain such incidental and consequential provision as appears to the Treasury or, as the case may be, Board to be appropriate. (4) A statutory instrument made in the exercise of the power conferred by this paragraph shall be subject to annulment in pursuance of a resolution of the Commons House of Parliament.

• (8) Subject to paragraph 6(1) of Schedule 8 to the Finance Act 1984 (deposits denominated in a foreign currency not to be treated as relevant deposits before 6th April 1986), subsections (3), (4) and (6) above apply in relation to payments of interest made or credited after 5th April 1985.

• (9) There shall be made such assessments, or reductions of assessments, or, on a claim in that behalf, repayments of tax as may in any case be required in order to give effect to subsections (3), (4), (6) and (8) above.

• (10) The words " Regulations under paragraph 3A of Schedule 8 to the Finance Act 1984 " shall be added at the end of each column in the Table in section 98 of the Taxes Management Act 1970 (penalties for failure to comply with notices, furnish information etc.).

Group relief: modifications

39

• (1) Section 258 and the following sections of Chapter I of Part XI of the Taxes Act (the enactments relating to group relief) shall have effect subject to Part I of Schedule 9 to this Act.

• (2) Section 263 of the Taxes Act (exclusion of double allowances etc.) shall be amended in accordance with Part II of Schedule 9 to this Act and in that Part—

• (a) paragraphs 9, 10 and 13 have effect in relation to any claim with respect to an accounting period of the surrendering company which begins on or after 1st August 1985; and

• (b) paragraphs 11 and 12 have effect in relation to any claim with respect to an accounting period of the claimant company which begins on or after that date.

• (3) In subsection (2) above " the surrendering company " and " the claimant company " have the meaning assigned by section 258 of the Taxes Act.

Building societies

40

• (1) Section 343 of the Taxes Act (arrangements for building societies to account for tax on dividends and interest etc.) shall be amended in accordance with this section.

• (2) In subsection (1), after the words " year of assessment" there shall be inserted " ending before 6th April 1986".

• (3) After subsection (1) there shall be inserted the following subsections—

(1A) The Board may by regulations made by statutory instrument make provision with respect to the year 1986-87 and any subsequent year of assessment requiring building societies, on such sums as may be determined in accordance with the regulations, to account for and pay an amount representing income tax calculated in part at the basic rate and in part at the reduced rate determined for the year of assessment concerned under section 26(1)(a) of the Finance Act 1984; and any such regulations may contain such incidental and consequential provisions as appear to the Board to be appropriate, including provisions requiring the making of returns. (1B) A statutory instrument made in the exercise of the power conferred by subsection (1A) above shall be subject to annulment in pursuance of a resolution of the Commons House of Parliament.

• (4) In subsection (2), for the words from the beginning to " this section" there shall be substituted " For any year of assessment to which regulations under subsection (1A) above apply "; for the words " the society ", in the first place where they occur, there shall be substituted " a building society " ; in paragraph (a) for the words " total profits of the society " there shall be substituted " income of the society from the trade carried on by it " ; and in paragraph (b) the words from " except that" to the end shall be omitted.

• (5) In subsection (3), for the words preceding paragraph (a) there shall be substituted " Except in so far as regulations under subsection (1A) above otherwise provide, for any year of assessment to which such regulations apply"; in paragraph (a) for the words " that society " there shall be substituted " a building society " ; and paragraphs (iii) and (iv) of the proviso shall be omitted.

• (6) In subsection (4), for the words from the beginning to "this Act" there shall be substituted " Notwithstanding anything in Part II of this Act, for any year of assessment to which regulations under subsection (1A) above apply " and for the words " the society" there shall be substituted " a building society".

• (7) In subsection (7), for the words following " dividend " there shall be substituted " has the meaning assigned to it by regulations under subsection (1A) above".

• (8) Subsections (6), (8A), (8B) and (9) shall be omitted.

• (9) Subsections (4) to (8) above have effect for the year 1986-87 and subsequent years of assessment.

• (10) 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) in the first column, after the words " Schedule 6, paragraph 10 ", and