Finance Act 1985

(10A) (1) Where, on an application by an authorised person, a justice of the peace or, in Scotland, a justice (within the meaning of section 462 of the Criminal Procedure (Scotland) Act 1975) is satisfied that there are reasonable grounds for believing— (a) that an offence in connection with the tax is being, has been or is about to be committed, and (b) that any recorded information (including any document of any nature whatsoever) which may be required as evidence for the purpose of any proceedings in respect of such an offence is in the possession of any person, he may make an order under this paragraph. (2) An order under this paragraph is an order that the person who appears to the justice to be in possession of the recorded information to which the application relates shall— (a) give an authorised person access to it, and (b) permit an authorised person to remove and take away any of it which he reasonably considers necessary, not later than the end of the period of seven days beginning on the date of the order or the end of such longer period as the order may specify. (3) The reference in subparagraph (2)(a) above to giving an authorised person access to the recorded information to which the application relates includes a reference to permitting the authorised person to take copies of it or to make extracts from it. (4) Where the recorded information consists of information contained in a computer, an order under this paragraph shall have effect as an order to produce the information in a form in which it is visible and legible and, if the authorised person wishes to remove it, in a form in which it can be removed. (5) This paragraph is without prejudice to paragraphs 8 and 10 above. (10B) (1) An authorised person who removes anything in the exercise of a power conferred by or under paragraph 10 or 10A above shall, if so requested by a person showing himself— (a) to be the occupier of premises from which it was removed, or (b) to have had custody or control of it immediately before the removal, provide that person with a record of what he removed. (2) The authorised person shall provide the record within a reasonable time from the making of the request for it. (3) Subject to subparagraph (7) below, if a request for permission to be granted access to anything which— (a) has been removed by an authorised person, and (b) is retained by the Commissioners for the purpose of investigating an offence, is made to the officer in overall charge of the investigation by a person who had custody or control of the thing immediately before it was so removed or by someone acting on behalf of such a person, the officer shall allow the person who made the request access to it under the supervision of an authorised person. (4) Subject to subparagraph (7) below, if a request for a photograph or copy of any such thing is made to the officer in overall charge of the investigation by a person who had custody or control of the thing immediately before it was so removed, or by someone acting on behalf of such a person, the officer shall— (a) allow the person who made the request access to it under the supervision of an authorised person for the purpose of photographing it or copying it; or (b) photograph or copy it, or cause it to be photographed or copied. (5) Where anything is photographed or copied under subparagraph (4)(b) above the photograph or copy shall be supplied to the person who made the request. (6) The photograph or copy shall be supplied within a reasonable time from the making of the request. (7) There is no duty under this paragraph to grant access to, or to supply a photograph or copy of, anything if the officer in overall charge of the investigation for the purposes of which it was removed has reasonable grounds for believing that to do so would prejudice— (a) that investigation; (b) the investigation of an offence other than the offence for the purposes of the investigation of which the thing was removed; or (c) any criminal proceedings which may be brought as a result of— (i) the investigation of which he is in charge, or (ii) any such investigation as is mentioned in paragraph (b) above. (8) Any reference in this paragraph to the officer in overall charge of the investigation is a reference to the person whose name and address are endorsed on the warrant or order concerned as being the officer so in charge. (10C) (1) Where, on an application made as mentioned in subparagraph (2) below, the appropriate judicial authority is satisfied that a person has failed to comply with a requirement imposed by paragraph 10B above, the authority may order that person to comply with the requirement within such time and in such manner as may be specified in the order. (2) An application under subparagraph (1) above shall be made,— (a) in the case of a failure to comply with any of the requirements imposed by subparagraphs (1) and (2) of paragraph 10B above, by the occupier of the premises from which the thing in question was removed or by the person who had custody or control of it immediately before it was so removed, and (b) in any other case, by the person who had such custody or control. (3) In this paragraph “the appropriate judicial authority” means— (a) in England and Wales, a magistrates’ court; (b) in Scotland, the sheriff; and (c) in Northern Ireland, a court of summary jurisdiction, as defined in Article 2(2)(a) of the Magistrates’ Courts (Northern Ireland) Order 1981. (4) In England and Wales and Northern Ireland, an application for an order under this paragraph shall be made by way of complaint; and sections 21 and 42(2) of the Interpretation Act (Northern Ireland) 1954 shall apply as if any reference in those provisions to any enactment included a reference to this paragraph.

SCHEDULE 8

Interpretation

1

In this Schedule “Schedule 8” means Schedule 8 to the principal Act (constitution and procedure of value added tax tribunals).

The President

2

• (1) In paragraph 2 of the Schedule 8, in subparagraph (2) after the words “Lord Chancellor”, there shall be inserted “after consultation with the Lord Advocate”.

• (2) After that subparagraph there shall be inserted the following subparagraph—

(3) Subject to paragraph 3 below, the appointment of the President shall be for such term and subject to such conditions as may be determined by the Lord Chancellor, after consultation with the Lord Advocate, and a person who ceases to hold the office of President shall be eligible for reappointment thereto.

3

• (1) In paragraph 3 of Schedule 8, in subparagraph (1) after the word “office”, in the second place where it occurs, there shall be inserted “(a)” and at the end of the subparagraph there shall be added

or (b) if subparagraph (1A) below applies, on the date on which he attains the age of seventyfive

.

• (2) After subparagraph (1) of that paragraph there shall be inserted the following subparagraph—

(1A) If the Lord Chancellor, after consultation with the Lord Advocate, considers it desirable in the public interest to do so, he may authorise the President to continue in office after the end of the completed year of service mentioned in subparagraph (1) (a) above.

• (3) In subparagraph (2) of that paragraph after the word “fit” there shall be inserted “and after consultation with the Lord Advocate”.

• (4) At the end of subparagraph (3) of that paragraph there shall be added the words “after consultation with the Lord Advocate”.

• (5) In subparagraph (4) of that paragraph for the words, “the Treasury may” there shall be substituted “the Lord Chancellor may with the approval of the Treasury”.

• (6) In subparagraph (5) of that paragraph for the words “the Treasury”, where they first occur, there shall be substituted “the Lord Chancellor” and for the words “the Treasury may” there shall be substituted “the Lord Chancellor may with the approval of the Treasury”.

Sittings of tribunals

4

In paragraph 4 of Schedule 8—

• (a) for the words “the President” there shall be substituted “the Lord Chancellor or, in relation to Scotland, the Secretary of State”;

• (b) the words “with the consent of the Treasury” shall be omitted; and

• (c) for the word “he” there shall be substituted “the Lord Chancellor or, as the case may be, the Secretary of State”.

Membership of tribunals

5

• (1) In paragraph 7 of Schedule 8, in subparagraph (3), after the word “made”, when it first occurs, there shall be inserted “by the appropriate authority, that is to say” and in each of paragraphs (a) to (c) the word “by” shall be omitted.

• (2) After subparagraph (3) of that paragraph there shall be inserted the following subparagraphs—

(3A) No person may be appointed to a panel of chairmen of tribunals for England and Wales or Northern Ireland unless he is a barrister or solicitor of not less than seven years’ standing; and no person may be appointed to a panel of chairmen of tribunals for Scotland unless he is an advocate or solicitor of not less than seven years’ standing. (3B) Subject to the following provisions of this paragraph, the appointment of a chairman of value added tax tribunals shall be for such term and subject to such conditions as may be determined by the appropriate authority, and a person who ceases to hold the office of chairman shall be eligible for reappointment thereto. (3C) A chairman of value added tax tribunals may resign his office at any time and shall vacate his office— (a) at the end of the completed year of service in which he attains the age of seventytwo; or (b) if subparagraph (3D) below applies in his case, on the date on which he attains the age of seventyfive. (3D) If the appropriate authority considers it desirable in the public interest to do so, he may authorise a chairman of value added tax tribunals to continue in office after the end of the completed year of service mentioned in subparagraph (3C)(a) above. (3E) The appropriate authority may, if he thinks fit, remove a chairman of value added tax tribunals from office on the ground of incapacity or misbehaviour.

• (3) In subparagraph (4) of that paragraph for the words “the Treasury may”, in both places where they occur, there shall be substituted “the Lord Chancellor may with the approval of the Treasury”.

• (4) In subparagraph (5) of that paragraph for the words “the Treasury”, where they first occur, there shall be substituted “the Lord Chancellor” and for the words “the Treasury may” there shall be substituted “the Lord Chancellor may with the approval of the Treasury”.

Administration

6

• (1) Officers and staff may be appointed under section 27 of the Courts Act 1971 (court staff) for carrying out the administrative work of value added tax tribunals in England and Wales.

• (2) The Secretary of State may make available such officers and staff as he may consider necessary for carrying out the administrative work of value added tax tribunals in Scotland.

[Schedules 9to 13repealed by ICTA 1988 s.844and Sch.31.See 1987edition for these provisions.]

[Schedules14to 17repealed by 1990(C) s.164(4)and Sch.2.See 1989edition for these provisions.]

SCHEDULES 9—13

PART I — General Modifications

Interpretation

1

In this Part of this Schedule—

• (a) a " company owned by a consortium" means either such a trading company as is referred to in paragraph (a) or paragraph (b) of subsection (2) of section 258 of the Taxes Act or such a holding company as is referred to in paragraph (c) of that subsection (companies owned directly or indirectly by consortia);

• (b) a " consortium claim " means a claim for group relief made by virtue of subsection (2) of section 258 of the Taxes Act;

• (c) a " group claim " means a claim for group relief made by virtue of subsection (1) of that section ;

• (d) a "group/consortium company" means a company which is both a member of a group of companies and a company owned by a consortium ;

• (e) " relevant accounting period " means an accounting period beginning on or after 1st August 1985 ; and

• (f) other expressions have the same meaning as in section 258 and the following sections of Chapter I of Part XI of the Taxes Act.

Claims for losses etc. of a group /consortium company

2

• (1) For the purpose of a consortium claim in respect of the loss or other amount of any relevant accounting period of a group/ consortium company, that loss or other amount shall be treated as reduced (or, as the case may be, extinguished) by first deducting therefrom the potential relief attributable to group claims.

• (2) Subject to sub-paragraph (3) below, in relation to the loss or other amount of a relevant accounting period of a group/consortium company, the potential relief attributable to group claims is the aggregate amount of group relief that would be claimed if every company which, as a member of the same group of companies as the group /consortium company, could make a group claim in respect of that loss or other amount made such a claim for an amount which, when set against the claimant company's total profits for its corresponding accounting period, would equal those profits.

• (3) Where for any accounting period another member of the group of companies of which the group/consortium company is a member has a loss or other amount available for relief and one or more group claims is or are in fact made in respect of that loss or other amount, account shall be taken of the relief so claimed before determining (in relation to the loss or other amount of the group/consortium company) the potential relief attributable to group claims under sub-paragraph (2) above.

Claims for relief by a group/consortium company

3

• (1) In any case where—

• (a) a consortium claim is made by a group/consortium company in respect of a loss or other amount of an accounting period of a member of the consortium, and

• (b) the corresponding accounting period of the group/consortium company is a relevant accounting period,

the total profits of that accounting period of the group/consortium company, against a fraction of which that loss or other amount may be set off (in accordance with section 259(8)(b) of the Taxes Act), shall be treated as reduced (or, as the case may be, extinguished) by deducting therefrom the potential relief available to the group/consortium company by way of group claims.

• (2) Subject to sub-paragraph (3) below, in relation to a relevant accounting period of a group/consortium company, the potential relief available to the company by way of group claims is the maximum amount of group relief that could be claimed by the company for that accounting period on group claims relating to the losses or other amounts available for relief of other members of the group of companies of which the group/consortium company is a member.

• (3) Where another member of the group of companies of which the group/consortium company is a member in fact makes one or more group claims in respect of losses or other amounts of other members of the group, account shall be taken of the relief already claimed by that company in determining the potential relief available to the group/consortium company by way of group claims under subparagraph (2) above.

Trading losses to be set against profits before group relief

4

• (1) Where a company owned by a consortium—

• (a) has in any relevant accounting period incurred such a loss as is referred to in section 259(1) of the Taxes Act, and

• (b) has profits (of whatever description) of that accounting period against which that loss could be set off under subsection (2) of section 177 of that Act,

the amount of that loss which is available to any member of the consortium on a consortium claim shall be determined on the assumption that the company owned by the consortium has made a claim under that subsection requiring the loss to be so set off.

• (2) Where the company referred to in sub-paragraph (1) above is a group/consortium company, the amount of the loss shall be determined under that sub-paragraph before any reduction is made under paragraph 2 above.

Extension of scope of consortium relief

5

• (1) This paragraph applies where—

• (a) a company (in this paragraph referred to as " the link company ") which is a member of a consortium is also a member of a group of companies; and

• (b) the link company could (disregarding any deficiency of profits) make a consortium claim in respect of the loss or other amount eligible for relief of a relevant accounting period of a company owned by the consortium.

• (2) Subject to sub-paragraphs (3) and (4) below, a company (in this paragraph referred to as a group member ") which is a member of the group referred to in sub-paragraph (1)(a) above but is not itself a member of the consortium may make any consortium claim which could be made by the link company ; and the fraction which is appropriate under section 259(8) of the Taxes Act where a group member is the claimant company shall be the same as that which would be appropriate if the link company were the claimant company.

• (3) A group member may not, by virtue of sub-paragraph (2) above, make a consortium claim in respect of the loss or other amount of any relevant accounting period of a company owned by the consortium unless the claimant company was a member of the group concerned throughout the whole of the accounting period or, as the case may be, each accounting period of the link company which, if that company were making the claim, would be a corresponding accounting period in relation to the relevant accounting period concerned.

• (4) The maximum amount of relief which, in the aggregate, may be claimed by group members and the link company by consortium claims relating to the loss or other amount of any relevant accounting period of a company owned by the consortium shall not exceed the relief which could have been claimed by the fink company (disregarding any deficiency of profits) if this paragraph had not been enacted.

6

• (1) This paragraph applies where—

• (a) a company (in this paragraph referred to as "the link company") which is a member of a consortium is also a member of a group of companies ; and

• (b) a company which is a member of that group of companies but is not itself a member of the consortium has for any relevant accounting period a loss or other amount available for relief;

and, in relation to the link company, any reference in this paragraph to a group member is a reference to a company falling within paragraph (b) above.

• (2) Subject to the following provisions of this paragraph, a company owned by the consortium may make any consortium claim in respect of the loss or other amount referred to in sub-paragraph (1)(b) above which it could make if the group member were a member of the consortium at all times when the link company was such a member, but not at any other time.

• (3) The fraction which is appropriate under section 259(8) of the Taxes Act in relation to a consortium claim made by virtue of subparagraph (2) above shall be the same as that which would be appropriate if the link company were the surrendering company, except that the accounting period in respect of which the member's share in the consortium is to be ascertained shall be that of the group member which is in fact the surrendering company.

• (4) A company owned by the consortium may not, by virtue of sub-paragraph (2) above, make a consortium claim in respect of the loss or other amount of any relevant accounting period of a group member unless, throughout the whole of that accounting period, the group member was a member of the group of companies referred to in sub-paragraph (1) above.

• (5) For any accounting period of a company owned by the consortium (in this sub-paragraph referred to as " the claimant company's accounting period "), the maximum amount of relief which, in the aggregate, may be claimed by that company by consortium claims relating to the losses or other amounts of accounting periods of the link company and group members shall not exceed that fraction of the total profits of the claimant company's accounting period which would be brought into account under section 259(8)(b) of the Taxes Act on a consortium claim in respect of which—

• (a) the link company was the surrendering company ; and

• (b) the link company's accounting period was the same as the claimant company's accounting period.

Restriction on consortium claims where companies join or leave consortium

7

• (1) In any case where—

• (a) a consortium claim is made in respect of the loss or other amount of a relevant accounting period of a company owned by a consortium (in this paragraph that claim is referred to as "the primary claim", that company is re-referred to as " the principal surrendering company " and that accounting period is referred to as " the principal accounting period "), and

• (b) the company making the primary claim or, if that claim is made by virtue of paragraph 5 above, the company which is the link company for the purposes of that paragraph was not a member of the consortium throughout the whole of the principal accounting period, and

• (c) on or after the date on which the primary claim is made, a consortium claim is made which falls within sub-paragraph (2) below,

no relief shall be allowed on the primary claim or, as the case may be, any relief which was so allowed shall be withdrawn.

• (2) A consortium claim is to be taken into account under subparagraph (1)(c) above if—

• (a) it is in respect of the loss or other amount of an accounting period of a surrendering company (being a company owned by the consortium referred to in sub-paragraph (1) above); and

• (b) it is made by the company making the primary claim or, if that claim or the claim mentioned in this sub-paragraph is made by virtue of paragraph 5 above, by any other member of the group referred to in sub-paragraph (1)(a) of that paragraph; and

• (c) at any time during the principal accounting period the surrendering company is a member of the same group of companies as the principal surrendering company ; and

• (d) the accounting period to which the claim relates falls, in whole or in part, within the principal accounting period.

• (3) Where any relief which has been allowed is withdrawn by virtue of sub-paragraph (1) above, all such adjustments shall be made, whether by way of assessment or otherwise, as may be necessary in consequence of that withdrawal.

8

• (1) In any case where—

• (a) a company owned by a consortium makes a consortium claim (in this paragraph referred to as " the primary claim ") in respect of the loss or other amount of a relevant accounting period of a member of the consortium or, if the primary claim is made by virtue of paragraph 6 above, of a company which, in relation to that member of the consortium, is a group member, within the meaning of that paragraph, and

• (b) the member of the consortium concerned (whether as the surrendering company or the link company, within the meaning of paragraph 6 above) was not a member of the consortium throughout the whole of the relevant accounting period referred to in paragraph (a) above, and

• (c) on or after the date on which the primary claim is made, a consortium claim is made which falls within sub-paragraph (2) below,

no relief shall be allowed on the primary claim or, as the case may be, any relief which was so allowed shall be withdrawn.

• (2) A consortium claim is to be taken into account under subparagraph (1)(c) above if—

• (a) it is made by a company owned by the consortium referred to in sub-paragraph (1) above ; and

• (b) the company making the claim is a member of the same group of companies as the company making the primary claim; and

• (c) the claim relates to the loss or other amount of an accounting period of the consortium member referred to in sub-paragraph (1) above or of a company which, in relation to that consortium member, is a group member, within the meaning of paragraph 6 above ; and

• (d) the accounting period referred to in paragraph (c) above falls, in whole or in part, in the relevant accounting period referred to in sub-paragraph (1)(a) above.

• (3) Where any relief which has been allowed is withdrawn by virtue of sub-paragraph (1) above, all such adjustments shall be made, whether by way of assessment or otherwise, as may be necessary in consequence of that withdrawal.

PART II — Amendments of Section 263 of Taxes Act

9

• (1) At the beginning of subsection (3) there shall be inserted the words " Subject to subsections (3A) and (3B) below".

• (2) In that subsection for the words from " are made " to " relate to " there shall be substituted the words " relating to".

• (3) In that subsection after the words "surrendering company ", in the first place where they occur, there shall be inserted " are made by two or more claimant companies which themselves are members of a group of companies".

10

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

(3A) If companies which are members of different groups make claims falling within subsection (3) above, that subsection shall apply separately in relation to the companies in each group. (3B) For the purposes of subsection (3) above, there shall be left out of account a claim made by a company if— (a) the claimant company joins or leaves a group of companies at the same time as the surrendering company ; and (b) both before and after that time either the claimant company is a 75 per cent, subsidiary of the surrendering company or the surrendering company is a 75 per cent, subsidiary of the claimant company or both companies are 75 per cent, subsidiaries of another company.

11

• (1) In subsection (4) for the words "If claims for group relief " there shall be substituted " Subject to subsection (4A) below, if claims as respects two or more surrendering companies which themselves are members of a group of companies".

• (2) In that subsection the words " as respects more than one surrendering company " shall be omitted.

12

After subsection (4) there shall be inserted the following subsections : —

(4A) If claims falling within subsection (4) above are made as respects surrendering companies which are members of different groups, that subsection shall apply separately in relation to claims as respects the surrendering companies in each group. (4B) For the purposes of subsection (4) above, there shall be left out of account a claim made as respects a surrendering company if— (a) the surrendering company joins or leaves the group of companies concerned at the same time as the claimant company ; and (b) both before and after that time either the surrendering company is a 75 per cent, subsidiary of the claimant company or the claimant company is a 75 per cent, subsidiary of the surrendering company or both companies are 75 per cent, subsidiaries of another company.

13

For subsection (5) there shall be substituted the following subsection : —

(5) References in subsections (3) to (4A) above to claims for group relief do not include references to consortium claims, that is to say, claims made by virtue of section 258(2) above.

.

SCHEDULES 14—17.

PART I — Paragraphs to be Substituted for Paragraph 3 of Schedule 1 to the Taxes Act

PART II — Insurances Made Between 1st June 1984 and 19th March 1985

1

• (1) If, with respect to a policy for the assurance of a gross sum which is issued as mentioned in section 40(5) of this Act, there is—

• (a) an infringement of any of the conditions in sub-paragraphs (2) to (7) of the paragraph 3 which is set out in Part I of this Schedule (including an infringement occurring before that paragraph comes into force as part of the Taxes Act), or

• (b) an infringement of the conditions in subsection (2) of section 334 of the Taxes Act,

section 332(1) of that Act shall not apply to so much as is attributable to that policy of the profits of the registered friendly society or branch concerned which arise from tax exempt life or endowment business, as defined in section 337 of that Act.

• (2) With respect to policies falling within sub-paragraph (1) above, that sub-paragraph has effect in place of section 334(1) of the Taxes Act.

• (3) Nothing in sub-paragraph (1) above shall be taken to affect the status of a policy as a qualifying policy within the meaning of Part I of Schedule 1 to the Taxes Act.

PART III — Control of Business Done by Old Societies

2

In this Part of this Schedule " old society " means a friendly society which is not a new society (as defined in section 337(3) of the Taxes Act).

3

• (1) This Part of this Schedule applies if, on or after 19th March 1985, an old society—

• (a) begins to carry on tax exempt life or endowment business; or

• (b) in the opinion of the Board begins to carry on such business on an enlarged scale or of a new character.

• (2) If it appears to the Board, having regard to the restrictions placed on qualifying policies issued by new societies by paragraphs 3(b)(1), 3(1)(c) and 3A(3) of Schedule 1 to the Taxes Act (as set out in Part I of tins Schedule), that for the protection of the revenue it is expedient to do so, the Board may give a direction to the old society under paragraph 4 below.

4

A direction under this paragraph is that (and has the effect that) the old society to which it is given is to be treated for the purposes of the Taxes Act as a new society with respect to business carried on after the date of the direction.

5

An old society to which a direction is given may, within thirty days of the date on which it is given, appeal against the direction to the Special Commissioners on the ground that—

• (a) it has not begun to carry on business as mentioned in paragraph 3(1)(a) or paragraph 3(1)(b) above ; or

• (b) that the direction is not necessary for the protection of the revenue.

SCHEDULE 11

Introduction

1

• (1) This sub-paragraph applies to deep discount securities issued by a company where one or both of the following applies—

• (a) immediately before the issue the assets held by the company included relevant securities with a value equal to at least 75 per cent, of the value of all the assets held by it;

• (b) the terms of issue of the deep discount securities are determined by the company by reference to (though not necessarily in such a way that they reflect) the terms of issue of relevant securities which are held by the company when the deep discount securities are issued or which it intends to acquire later.

• (2) This sub-paragraph applies to deep discount securities issued by a company where—

• (a) sub-paragraph (1) above would apply if the references to relevant securities included references to United Kingdom corporate bonds, and

• (b) the company acquired those bonds on or after their issue (by another company) in circumstances where sub-paragraph (1) above would have applied if they had been deep discount securities.

• (3) This sub-paragraph applies to deep discount securities of a particular kind issued by a company and in the case of which—

• (a) neither of the preceding sub-paragraphs applies, and

• (b) at any time in the first income period of the securities of that kind the assets held by the company include relevant securities with a value equal to at least 75 per cent, of the value of all the assets held by it.

• (4) This sub-paragraph applies to deep discount securities issued by a company where either—

• (a) they are issued on a conversion to which section 82 of the Capital Gains Tax Act 1979 applies of old securities, or

• (b) they are issued by a company in exchange for old securities in circumstances in which section 85(3) of that Act applies or are treated as so issued by virtue of section 86(1) of that Act,

and in this sub-paragraph "old securities" means deep discount securities to which sub-paragraph (1), (2) or (3) above or this subparagraph applies, except that securities to which sub-paragraph (3) above applies are not old securities unless sub-paragraph (3)(b) has been fulfilled in their case by the time the conversion or exchange concerned takes place.

• (5) In the following provisions of this Schedule " chargeable security " means a deep discount security to which any of the preceding sub-paragraphs applies.

• (6) In this paragraph—

• " deep discount securities " has the same meaning as in section 36 of the Finance Act 1984,

• " income period " has the meaning given by paragraph 1(7) of Schedule 9 to that Act,

• " issued " shall be construed in accordance with section 36(4) of that Act,

• "relevant securities" means securities within the meaning of Chapter IV of this Part of this Act, but excluding United Kingdom corporate bonds,

• "terms of issue" includes terms relating to amounts payable on redemption or by way of interest, or to times of payment of such amounts, and

• "value" in relation to assets means the price they might reasonably be expected to fetch on a sale in the open market.

• (7) For the purposes of this paragraph a company holds assets if it has a beneficial interest in them and acquires them if it acquires inch an interest in them.

• (8) For the purposes of this paragraph securities are of the same kind if they are treated as being of the same kind by the practice of a stock exchange, or would be so treated if dealt with on a stock exchange.

• (9) In this paragraph " United Kingdom corporate bonds " means securities—

• (a) issued by a company resident in the United Kingdom at the time of issue,

• (b) the debt on which represents and has at all times represented a normal commercial loan, as denned in paragraph 1(5) of Schedule 12 to the Finance Act 1973, and

• (c) which are expressed in sterling and in respect of which no provision is made for conversion into, or redemption in, a currency other than sterling.

• (10) For the purposes of sub-paragraph (9)(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.

The charge

2

• (1) Where a person acquires a chargeable security, the chargeable amount shall be treated as income chargeable to tax under Case III or (as the case may be) Case IV of Schedule D on each of the following occasions—

• (a) the end of each income period to fall within the period of ownership;

• (b) the end of any income period which ends but does not begin in the period of ownership.

• (2) In sub-paragraph (1) above " the chargeable amount" means—

• (a) where paragraph (a) applies, an amount equal to the income element for the income period;

• (b) where paragraph (6) applies, an amount equal to the income element for the part of the income period falling within the period of ownership.

• (3) The income chargeable shall (notwithstanding anything in sections 119 to 121 or, as the case may be, 122 to 124 of the Taxes Act) be taken into account in computing tax charged for the year of assessment in which the occasion concerned occurs.

• (4) Where the person disposes of the security, or paragraph 8(2)(a) of Schedule 9 to the Finance Act 1984 treats him as disposing of it, any amount (or the aggregate of any amounts) treated as income by virtue of this paragraph shall be deducted from the income chargeable by virtue of paragraph 1(1)(a) of that Schedule.

• (5) Paragraph 8(3) of that Schedule shall not apply in the case of a chargeable security which is converted or exchanged.

• (6) Sub-paragraph (4) above shall not affect the references in paragraphs 1(1)(c) and 9 of that Schedule to the amount mentioned in paragraph 1(1)(a) of that Schedule; and the references in paragraph 8(2)(b) and (c) of that Schedule to the amount on which he is chargeable shall be construed as references to the amount on which he would be chargeable apart from sub-paragraph (4) above.

• (7) Where an amount is (or amounts are) treated as income by virtue of this paragraph, then, in arriving at the accrued income attributable to the period between the person's acquisition and redemption for the purposes of paragraph 7(2) of that Schedule, that amount (or the aggregate of those amounts) shall be deducted from such income found under paragraph 7(2) apart from this sub-paragraph.

• (8) Section 360(2) of the Taxes Act (exemption for charities from tax on chargeable gains) shall apply in relation to tax chargeable by virtue of this paragraph as it applies in relation to tax on chargeable gains.

• (9) In this paragraph, expressions which are also used in paragraph 1 of Schedule 9 to the Finance Act 1984 have the same meanings as in that paragraph.

Information

3

Every company which issues a chargeable security to which paragraph 1(1), (2) or (4) above applies shall cause to be shown on fee certificate of each such security the fact that tax is chargeable under this Schedule.

Minor amendment

4

In paragraph 1(7) of Schedule 9 to the Finance Act 1984, in paragraph (b) of the definition of " income period ", after " begins on " there shall be inserted " the issue or on".

SCHEDULE 12

Introduction

1

In section 48 of this Act and this Schedule "limited partner" means—

• (a) a person who is carrying on a trade as a limited partner in a limited partnership registered under the Limited Partnerships Act 1907,

• (b) a person who is carrying on a trade as a general partner in a partnership, who is not entitled to take part in the management of the trade and who is entitled to have his liabilities, or his liabilities beyond a certain limit, for debts or obligations incurred for the purposes of the trade discharged or reimbursed by some other person, or

• (c) a person who carries on a trade jointly with others and who, under the law of any territory outside the United Kingdom, is not entitled to take part in the management of the trade and is not liable beyond a certain limit for debts or obligations incurred for the purposes of the trade.

Individuals as limited partners

2

• (1) This paragraph applies to an amount which may be given or allowed to an individual under any of the enactments specified in sub-paragraph (3) below—

• (a) in respect of a loss sustained by him in a trade, or of interest paid by him in connection with the carrying on of a trade, in a relevant year of assessment, or

• (b) as an allowance falling to be made to him for a relevant year of assessment either in taxing a trade or by way of discharge or repayment of tax to which he is entitled by reason of his participation in a trade.

• (2) Such an amount may be given or allowed otherwise than against income consisting of profits or gains arising from the trade only to the extent that the amount given or allowed or (as the case may be) the aggregate amount does not exceed the relevant sum.

• (3) The enactments are—

• (a) section 168 of the Taxes Act;

• (b) section 30 of the Finance Act 1978 ;

• (c) section 71 of the Capital Allowances Act 1968 ; and

• (d) section 75 of the Finance Act 1972.

• (4) In this paragraph—

• " relevant year of assessment" means a year of assessment at any time during which the individual carried on the trade as a limited partner;

• "the aggregate amount" means the aggregate of any amounts given or allowed to him at any time under any of the enactments specified in sub-paragraph (3) above— in respect of a loss sustained by him in the trade, or of interest paid by him in connection with carrying it on, in any relevant year of assessment, or as an allowance falling to be made to him for any relevant year of assessment either in taxing the trade or by way of discharge or repayment of tax to which he is entitled by reason of his participation in the trade ;

• " the relevant sum " means the amount of his contribution to the trade as at the appropriate time ; and

• " the appropriate time " is the end of the relevant year of assessment in which the loss is sustained or the interest paid, or for which the allowance falls to be made (except that where he ceased to carry on the trade during that year of assessment it is the time when he so ceased).

• (5) To the extent that an allowance is taken into account in computing profits or gains or losses in the year of loss by virtue of section 169(1) of the Taxes Act it shall, for the purposes of section 48 of this Act and this paragraph, be treated as falling to be made in the year of loss (and not the year of assessment for which the year of loss is the basis year).

Companies as limited partners

3

• (1) This paragraph applies to an amount which may be given or allowed under any of the enactments specified in sub-paragraph (3) below—

• (a) in respect of a loss incurred by a company in a trade, or of charges paid by a company in connection with the carrying on of a trade, in a relevant accounting period, or

• (b) as an allowance falling to be made to a company for a relevant accounting period either in taxing a trade or by way of discharge or repayment of tax to which it is entitled by reason of its participation in a trade ;

and in this paragraph such a company is referred to as "the partner company ".

• (2) Such an amount may be given or allowed to the partner company otherwise than against profits or gains arising from the trade, or to another company, only to the extent that the amount given or allowed or (as the case may be) the aggregate amount does not exceed the relevant sum.

• (3) The enactments are-

• (a) section 177(2) of the Taxes Act;

• (b) section 74 of the Capital Allowances Act 1968 ;

• (c) section 248 of the Taxes Act; and

• (d) subsections (1), (2) and (6) of section 259 of the Taxes Act.

• (4) In this paragraph—

• "relevant accounting period" means an accounting period of the partner company at any time during which it carried on the trade as a limited partner ;

• " the aggregate amount" means the aggregate of any amounts given or allowed to the partner company or another company at any time under any of the enactments specified in sub-paragraph (3) above— in respect of a loss incurred by the partner company in the trade, or of charges paid by it in connection with carrying it on, in any relevant accounting period, or as an allowance falling to be made to the partner company for any relevant accounting period either in taxing tie trade or by way of discharge or repayment of tax to which it is entitled by reason of its participation in the trade;

• "the relevant sum" means the amount of the partner company's contribution to the trade as at the appropriate time ; and

• " the appropriate time " is the end of the relevant accounting period in which the loss is incurred or the charges paid, or for which the allowance falls to be made (except that where the partner company ceased to carry on the trade during that accounting period it is the time when it so ceased).

Contribution

4

A person's contribution to a trade at any time is the aggregate Of—

• (a) the amount which he has contributed to it as capital and has not, directly or indirectly, drawn out or received back (other than anything which he is or may be entitled so to draw out or receive back at any time when he carries on the trade as a limited partner or which he is or may be entitled to require another person to reimburse to him), and

• (6) the amount of any profits or gains of the trade to which he is entitled but which he has not received in money or money's worth.

SCHEDULE 13

Recovery of tax credits incorrectly paid

1

• (1) Where the provisions of section 54 of this Act apply so as to withdraw the entitlement of a company to claim to have a tax credit in respect of a qualifying distribution set against the income tax chargeable on its income and to have the excess of the credit over that income tax paid to it and the company (in this paragraph referred to as " the recipient company ") has either had that excess paid to it, or has received an additional amount in accordance with arrangements made under Regulation 2(1) of the Double Taxation Relief (Taxes on Income) (General) (Dividend) Regulations 1973, it shall be liable to a fine for the violation of the provisions of section 54 of this Act equal to twice the amount of the excess or additional amount as the case may be and such fine (in this section referred to as " the recoverable amount") shall be payable to the Board and be treated as having become payable at the date when the excess or additional amount was paid to the recipient company and may be recovered in accordance with sub-paragraphs (2) to (5) below.

• (2) The recoverable amount may be assessed and recovered as if it were unpaid tax and section 30 of the Taxes Management Act 1970 (recovery of overpayment of tax, etc.) shall apply accordingly.

• (3) Any amount which may be assessed and recovered as if it were unpaid tax by virtue of this paragraph shall carry interest at the rate of 9 per cent, per annum from the date when it was payable in accordance with this paragraph until the date it is paid and it is hereby declared that this paragraph applies to a recoverable amount which is paid without the making of an assessment (but is paid after it is due) and that, where the recoverable amount is charged by any assessment (whether or not any part of it has been paid when the assessment is made), this paragraph applies in relation to interest running before, as well as after, the making of the assessment.

• (4) Where the recoverable amount is not paid by the recipient company within six months from the date on which it became payable—

• (a) the recoverable amount may at any time within six years from the date on which it became payable be assessed and recovered as if it were unpaid tax due from any person who is or was at any time prior to the expiration of the said six year period connected with the recipient company, or would have been connected on the assumption that all the facts and circumstances relating to the recipient company at the time the excess or additional amount as the case may be was paid continued to apply for six years thereafter, and section 30 of the Taxes Management Act 1970 shall apply accordingly, and

• (b) as respects its accounting periods beginning with that in which the excess or additional amount referred to in subparagraph (1) above was paid and ending with that following that in which the recoverable amount is paid in accordance with the provisions of this paragraph, the company which made the qualifying distribution in respect of which the recipient company received the excess or additional amount Shall not be entitled to set any advance corporation tax paid by it against its liability to corporation tax for such periods in accordance with section 85 of the Finance Act 1972 (payments of advance corporation tax to be set against company's liability to corporation tax on its income) nor to surrender the benefit of the whole or any part of any amount of advance corporation tax to a subsidiary in accordance with section 92 of that Act (setting of company's surplus advance corporation tax against subsidiary's liability) in such periods.

• (5) Where a recoverable amount is assessed and recovered from a person connected with the recipient company in accordance with sub-paragraph (4)(a) above, that person shall be liable for the interest payable in accordance with sub-paragraph (3) above and, until the interest is so paid, sub-paragraph (4)(b) above shall apply as if the words " the interest due in accordance with sub-paragraph (3) above is paid " were substituted for the words " the recoverable amount is paid in accordance with the provisions of this paragraph

• (6) Interest payable under this paragraph shall be paid without any deduction of income tax and shall not be allowed as a deduction in computing any income, profits or losses for any tax purposes.

• (7) Where under the law in force in a territory outside the United Kingdom interest is payable subject to a deduction in respect of taxation and such deduction applies to an amount of interest paid in accordance with sub-paragraph (3) above, the reference to the rate of 9 per cent, per annum in that sub-paragraph shall be deemed to be a reference to such rate of interest as after such deduction shall be equal to the rate of 9 per cent, per annum.

Claims to payment of tax credits following remedial legislation in unitary states

2

• (1) This paragraph has effect where a company to which section 54 applies has a qualifying presence in a province, state or other part of a territory outside the United Kingdom which has been prescribed as a unitary state for the purposes of that section and, at the time when a qualifying distribution is made to that company by a company which is resident in the United Kingdom, that state has enacted legislation the effect of which is that, as from a future date which shall not be later than 31st December 1986, it will cease to be a unitary state within the meaning of the definition in paragraph 5(1) below, notwithstanding that it remains prescribed as such for the purposes of that section.

• (2) In the circumstances described in sub-paragraph (1) above the company in receipt of the qualifying distribution shall be entitled on or after the effective date to claim to have the tax credit to which it is entitled in respect of the distribution set against its hability to income tax and to have the excess (if any) of the credit over that liability paid to it; but, if payment of the excess or of the additional amount referred to in Regulation 2(1) of the Double Taxation Relief (Taxes on Income) (General) (Dividend) Regulations 1973 is made before the effective date, the provisions of paragraph 1 above shall apply in relation to that payment regardless of lie enactment of the legislation referred to in sub-paragraph (1) above.

• (3) For the purposes of this paragraph the effective date shall be ¢deemed to be the date (not to be later than 31st December 1986) on which the legislation referred to in sub-paragraph (1) above actually becomes effective in the province, state or other part of the territory outside the United Kingdom which has been prescribed as a unitary state for the purposes of section 54, irrespective of the date, if any, specified in that legislation.

Avoidance of provision withdrawing tax credits

3

• (1) In any case where arrangements are made, whether before or after section 54 comes into force, as a result of which interest is paid or a discount is allowed by or through a person who is resident in the United Kingdom, or carries on business in the United Kingdom through a branch or agency, and it is reasonable to suppose that, if such payment or allowance had not been made, a qualifying distribution would have been made by the person by or through whom the payment or allowance is made, or by another company resident in the United Kingdom, to a company which has, or is an associated company of a company which has, a qualifying presence in a unitary state at the time when the payment or allowance is made, then—

• (a) no person who receives that payment or allowance shall been titled to relief from income tax or corporation tax thereon by virtue of arrangements having effect under section 497(1) of the Taxes Act, and

• (b) the payment or allowance shall not be allowed as a deduction in computing any income, profits or losses for any tax purposes.

• (2) Without prejudice to the generality of sub-paragraph (1) above, where a payment or allowance is not of itself a payment or allowance to which sub-paragraph (1) above applies, but is made in conjunction with other payments of whatever nature and taken together with those payments has substantially similar effect to a distribution, then, for the purposes of sub-paragraph (1) above, it shall be treated as a payment or allowance within that sub-paragraph.

• (3) Any company which has received such a payment of interest as is referred to in sub-paragraph (1) above, from which income tax has not been deducted by the person making the payment, and has a qualifying presence in a unitary state at the time of the payment, shall be treated for the purposes of paragraph 1 above as a company from which the entitlement to claim payment of the excess of a tax credit over the income tax chargeable on its income has been withdrawn by section 54(1) and which has had paid to it such an excess in an amount equal to the income tax which should have been deducted from the payment of interest.

Power to inspect documents of non-resident companies

4

• (1) Where it appears to the Board that the provisions of section 54 and this Schedule may apply to a company resident outside the United Kingdom (in this paragraph referred to as a "foreign parent"), the Board may, by notice in writing given to the foreign parent or any associated company of that foreign parent, require that company within such time (not being less than thirty days) as may be specified in the notice to make available for inspection any books, accounts, or other documents or records whatsoever of that company where in the opinion of the Board it is proper that they should inspect such documents for the purposes of ascertaining whether the said provisions apply to the foreign parent or such associated company notwithstanding that in the opinion of the person to whom the notice is given those provisions do not apply to that company or any associated company of that company.

• (2) In the Table to section 98 of the Taxes Management Act 1970 (penalties) at the end of the first column there shall be added—

Paragraph 4 of Schedule 13 to the Finance Act 1985

.

Meaning of " unitary state ", etc.

5

• (1) In this Schedule and section 54 of this Act—

• " group" and " member of a group" shall be construed in accordance with section 272 (1) of the Taxes Act (definition of groups of companies) with the omission of the restriction in paragraph (a) of that subsection and the substitution of the words " 51 per cent. " for the words "75 per cent." wherever they occur,

• "qualifying distribution " has the same meaning as in Part V of the Finance Act 1972 (taxation of companies and company distributions),

• " unitary state" means a province, state or other part of a territory outside the United Kingdom with the government of which the arrangements referred to in subsection (1) of section 54 have been made which, in taxing the income or profits of companies from sources within that province, state or other part, takes into account, or is entitled to take into account, income, receipts, deductions, outgoings or assets of such companies, or of associated companies of such companies, arising, expended or situated as the case may be outside that territory and which has been prescribed under subsection (7) of that section as a unitary state for the purposes of that section ; but no such province, state or other part shall be so prescribed which only takes into account such income, receipts, deductions, outgoings or assets— if the associated company was incorporated under the law of the territory, or for the purpose of granting relief in taxing dividends received by companies.

• (2) For the purposes of this Schedule and section 54 of this Act—

• (a) section 533 of the Taxes Act (connected persons) applies; and

• (b) section 302 of the Taxes Act (meaning of " associated company " and " control") applies with the substitution of the words " six years " for " one year " in subsection (1) of that section.

SCHEDULE 14

PART I — Amendments with Respect to Expenditure Incurred on or after 1st April 1985

1

In section 46 of the Finance Act 1971 (machinery and plant on lease) after subsection (1) there shall be inserted the following subsection—

(1A) Where subsection (1) above applies, the question whether the provision of the machinery or plant is to be treated as being wholly and exclusively or only partly for the purposes of the trade referred to in paragraph (a) of that subsection shall be determined according to whether the machinery or plant was in fact provided wholly and exclusively for the purpose of letting otherwise than in the course of a trade or only partly for that purpose.

2

In paragraph 5 of Schedule 8 to that Act (use partly for trade purposes and partly for other purposes) in sub-paragraph (1) (first-year allowances)—

• (a) for the words from " that, during" to " used for other purposes " there shall be substituted " that the provision of the machinery or plant is partly for purposes other than those of a trade carried on by him";

• (b) for the words " machinery or plant were to be used only " there shall be substituted " provision of the machinery or plant were wholly and exclusively"; and

• (c) the words " during that period " shall be omitted.

PART II — Amendments with Respect to Chargeable Periods etc. ending on or after 1st April 1985

The Finance Act 1971

3

• (1) At the end of subsection (2A) of section 44 of the Finance Act 1971 (which was inserted by section 59 of the Finance Act 1984) there shall be added the words " and all such assessments and adjustments of assessments shall be made as may be necessary to give effect to this subsection".

• (2) In subsection (4) of that section (definition of "qualifying expenditure ") in paragraph (a), for the words from " which is in use " to " those purposes ", where those words secondly occur, there shall be substituted " being expenditure incurred in the chargeable period in question or its basis period or at any previous time, and "

• (3) In subsection (5) of that section (which among other matters requires, as a condition for bringing disposal value into account, that the machinery or plant has been in use for the purposes of the trade) for the words from " on the provision of which " to the end of paragraph (c) mere shall be substituted—

(a) on the provision of which for the purposes of the trade he has incurred capital expenditure; and (b) which belongs to him at some time in the chargeable period or its basis period ; and (c) in respect of which, in the chargeable period or its basis period, one of the following events occurs, namely— (i) the machinery or plant ceases to belong to him ; (ii) he loses possession of the machinery or plant in circumstances where it is reasonable to assume that the loss is permanent; (iii) the machinery or plant ceases to exist as such (as a result of destruction, dismantling or otherwise); (iv) the machinery or plant begins to be used wholly or partly for purposes which are other than those of the trade; (v) the trade is permanently discontinued (or is treated by virtue of any provision of the Tax Acts as permanently discontinued); and that is the first such event to occur

.

4

In subsection (1) of section 46 of that Act (machinery and plant on lease) for paragraph (6) there shall be substituted the following paragraph—

(b) at the time when the lessor permanently ceases to let the machinery or plant otherwise than in the course of a trade, the machinery or plant shall be treated for the purposes of this Chapter as being used wholly for purposes other than those of the trade referred to in paragraph (a) above

.

5

• (1) In Schedule 8 to that Act (supplementary provisions) in paragraph 4 (disposal before bringing into use) in sub-paragraph (1) for the words from " the following provisions " onwards there shall be substituted " where—

• (a) a first-year allowance is made in respect of capital expenditure on the provision of machinery or plant, and

• (b) in the chargeable period related to the incurring of that expenditure, the disposal value of that machinery or plant falls to be brought into account in accordance with subsection (5) of section 44 of this Act,

that expenditure shall not, by virtue of sub-paragraph (ii) of paragraph (a) of subsection (4) of that section, be excluded from the capital expenditure referred to in that paragraph ".

• (2) In sub-paragraph (2) of that paragraph for the words " referred to in " there shall be substituted " by reason of which disposal value falls to be brought into account as mentioned in "and for the words from " (a) paragraph (a) " to " referred to were " there shall be substituted " section 44 of this Act, as modified by that subparagraph, shall have effect as if any reference in subsection (4)(a) of that section to capital expenditure incurred were a reference to".

6

In paragraph 5 of that Schedule (use partly for trade etc. purposes and partly for other purposes) for sub-paragraphs (2) to (5) there shall be substituted the following sub-paragraphs—

(2) Where a person carrying on a trade incurs capital expenditure on the provision of machinery or plant partly for the purposes of that trade (in sub-paragraphs (4) to (6) below referred to as "the actual trade") and partly for other purposes, it shall be assumed for the purposes of section 44 of this Act that he incurred the expenditure on the provision of the machinery or plant wholly and exclusively for the purposes of a trade (in sub-paragraphs (4) to (6) below referred to as "the notional trade ") carried on by him separately from the actual trade and any other trade carried on by him. (3) If, for any chargeable period, a person who has incurred expenditure on the provision of machinery or plant for the purposes of a trade (in sub-paragraphs (4) to (6) below referred to as "the actual trade ") is required to bring the disposal value of the machinery or plant into account by reason of it beginning in that chargeable period or its basis period to be used partly, but not wholly, for purposes other than those of the actual trade, it shall be assumed for the purposes of section 44 of this Act that, immediately after the beginning of that chargeable period or its basis period, he incurs capital expenditure equal to that disposal value on the provision of the machinery or plant wholly and exclusively for the purposes of a trade (in sub-paragraphs (4) to (6) below referred to as "the notional trade ") carried on by him separately from the actual trade and any other trade carried on by him. (4) Without prejudice to sub-paragraphs (i) to (iii) of paragraph (c) of subsection (5) of section 44 of this Act, it shall be assumed for the purposes of that section that the notional trade is permanently discontinued on the machinery or plant beginning to be used wholly for purposes other than those of the actual trade. (5) The allowance or charge under section 44 of this Act which, on the above assumptions, and having regard to subparagraph (6) below, would fall to be made for any chargeable period in the case of the notional trade— (a) shall be reduced to such extent as may be just and reasonable having regard to all the relevant circumstances of the case and, in particular, to the extent to which the machinery or plant was used in that chargeable period or its basis period otherwise than for the purposes of the actual trade ; and (b) shall, as so reduced, be made for that chargeable period in the case of the actual trade. (6) If an allowance under section 44 of this Act falling to be made by virtue of this paragraph for any chargeable period in the case of the actual trade is not claimed or is disclaimed under subsection (2A) of that section, or is reduced in amount in accordance with a requirement under the proviso of subsection (2) of that section or under subsection (2A) of that section then, in determining the allowance or charge under that section which would fall to be made for any subsequent chargeable period in the case of the notional trade, any allowance falling to be made in the case of that trade for the first-mentioned chargeable period shall be treated as not claimed or as disclaimed or, as the case may require, as proportionately reduced.

7

• (1) In paragraph 6 of that Schedule (effect of subsidies towards wear and tear) in sub-paragraph (4),—

• (a) for the words from the beginning to " in respect thereof " there shall be substituted " If an allowance has been made under section 44 of this Act for a chargeable period prior to that in which or, as the case may be, in the basis period of which the first sum is so paid in respect of the machinery or plant"; and

• (b) for the words " permanently ceased to be used for the purposes " there shall be substituted " begun to be used wholly for purposes other than those".

• (2) In sub-paragraph (5) of that paragraph—

• (a) in paragraph (a) for the words "the machinery or plant is brought into use" there shall be substituted " capital expenditure was incurred on providing the machinery or plant wholly and exclusively";

• (b) in paragraph (b) for the words from " it ceases " to " with " there shall be substituted " the notional trade is treated by virtue of paragraph (c) below as permanently discontinued " and for the word " being " there shall be substituted " are";

• (c) in paragraph (c) after the word "that" there shall be inserted " without prejudice to sub-paragraphs (i) to (iii) of paragraph (c) of subsection (5) of that section " and for the words from " ceasing " onwards there shall be substituted " beginning to be used wholly or partly for purposes other that those of the actual trade"; and

• (d) paragraph (d) shall be omitted.

• (3) In sub-paragraph (6) of that paragraph—

• (a) after the word " claimed ", in the first place where it occurs, there shall be inserted " or is disclaimed under subsection (2A) of that section";

• (b) after the words " proviso to subsection (2) of that section " there shall be inserted " or under subsection (2A) of that section"; and

• (c) for the words from " claimed ", in the last place where it occurs, onwards there shall be substituted " claimed or as disclaimed or, as the case may require, as proportionately reduced".

8

• (1) In paragraph 7 of that Schedule (effect of use for purposes of trade where no allowances previously available), in: paragraph (a) of sub-paragraph (1) for the words from " but" to " circumstances " there shall be substituted " for purposes which were".

• (2) After that sub-paragraph there shall be inserted the following sub-paragraph—

(1A) Where sub-paragraph (1) above applies, the question whether the provision of the machinery or plant is to be taken to be wholly and exclusively or only partly for the purposes of the trade shall be determined according to whether the use referred to in paragraph (a) or, as the case may be, paragraph (b) of that sub-paragraph is wholly and exclusively or only partly for those purposes.

9

• (1) In paragraph 10 of that Schedule (expensive motor cars), in sub-paragraph (2)—

• (a) in paragraph (a) the words from "immediately" to "the expenditure " shall be omitted and for the words " brings the motor car into use " there shall be substituted " incurred the expenditure on the provision of the motor car wholly and exclusively";

• (b) paragraph (b), except the final word " and", shall be omitted; and

• (c) in paragraph (c), after the word " that" there shall be inserted " without prejudice to sub-paragraphs (i) to (iii) of paragraph (c) of subsection (5) of that section " and for the words from " ceases " onwards there shall be substituted " begins to be used wholly or partly for purposes other than those of the actual trade".

• (2) In sub-paragraph (4) of that paragraph, for the words from the beginning to " applies " there shall be substituted " Where the disposal value of the motor car falls to be taken into account by reason of an event falling within section 44(5)(c)(i) of this Act and that event is such a sale or the performance of such a contract as is referred to in paragraph 3 of this Schedule".

10

In paragraph 15(3) of that Schedule (application of provisions of section 48 of the Capital Allowances Act 1968 relating to successions to trades) after the words "by substituting" there shall be inserted—

(a) in subsection (1), for the words 'in use', in each place where they occur, the words 'either in use or provided and available for use'; and (b) in subsection (2), for the word 'used' the words 'either used or provided and available for use'; and (c)

.

The Finance Act 1974

11

In section 17(1) of the Finance Act 1974 (expenditure on fire safety) the words " and had been in use for the purposes of the trade " shall be omitted.

The Finance Act 1975

12

In section 14(1) of the Finance Act 1975 (expenditure on thermal insulation) the words " and had been in use for the purposes of the trade " shall be omitted.

The Finance (No. 2) Act 1975

13

In section 49(1) of the Finance (No. 2) Act 1975 (expenditure on safety at sports grounds) the words " and had been in use for the purposes of the trade " shall be omitted.

The Finance Act 1980

14

• (1) In section 65 of the Finance Act 1980 (writing-down allowances etc in case of leased assets), in subsection (2),—

• (a) in paragraph (a) the words from " immediately " to " brought into use " shall be omitted and for the words " brings the machinery or plant into use " there shall be substituted " incurred the expenditure on the provision of the machinery or plant wholly and exclusively";

• (b) paragraph (b), except the final word " and", shall be omitted; and

• (c) in paragraph (c), after the word "that" there shall be inserted " without prejudice to sub-paragraphs (i) to (iii) of paragraph (c) of subsection (5) of that section " and for the words from " ceases " onwards there shall be substituted " begins to be used wholly or partly for purposes other than those of the actual trade".

• (2) In subsection (3) of that section,—