Finance Act 1986

• (3) Part I of Schedule 19 to this Act has effect, subject to Part II of that Schedule, with respect to transfers of value made, and other events occcurring, on or after 18th March 1986.

• (4) The transitional provisions in Part II of Schedule 19 to this Act shall have effect.

Gifts with reservation

102

• (1) Subject to subsections (5), (6) and (7A) below, this section applies where, on or after 28th March 1986, an individual disposes of any property by way of gift and either—

• (a) possession and enjoyment of the property is not bona fide assumed by the donee at or before the beginning of the relevant period; or

• (b) at any time in the relevant period the property is not enjoyed to the entire exclusion, or virtually to the entire exclusion, of the donor and of any benefit to him by contract or otherwise;

and in this section “the relevant period” means a period ending on the date of the donor’s death and beginning seven years before that date or, if it is later, on the date of the gift.

• (2) If and so long as—

• (a) possession and enjoyment of any property is not bona fide assumed as mentioned in subsection (1)(a) above, or

• (b) any property is not enjoyed as mentioned in subsection (1)(b) above,

the property is referred to (in relation to the gift and the donor) as property subject to a reservation.

• (3) If, immediately before the death of the donor, there is any property which, in relation to him, is property subject to a reservation then, to the extent that the property would not, apart from this section, form part of the donor’s estate immediately before his death, that property shall be treated for the purposes of the 1984 Act as property to which he was beneficially entitled immediately before his death.

• (4) If, at a time before the end of the relevant period, any property ceases to be property subject to a reservation, the donor shall be treated for the purposes of the 1984 Act as having at that time made a disposition of the property by a disposition which is a potentially exempt transfer.

• (5) This section does not apply if or, as the case may be, to the extent that the disposal of the property by way of gift is an exempt transfer by virtue of any of the following provisions of Part II of the 1984 Act,—

• (a) section 18 (transfers between spouses or civil partners) , except as provided by subsections (5A) and (5B) below;

• (b) section 20 (small gifts);

• (c) section 22 (gifts in consideration of marriage or civil partnership);

• (d) section 23 (gifts to charities);

• (e) section 24 (gifts to political parties);

• (ee) section 24A (gifts to housing associations);

• (f) section 25 (gifts for national purposes, etc);

• (g) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (h) section 27 (maintenance funds for historic buildings); ...

• (i) section 28 (employee trusts); and

• (j) section 28A (employee-ownership trusts).

• (5A) Subsection (5)(a) above does not prevent this section from applying if or, as the case may be, to the extent that—

• (a) the property becomes settled property by virtue of the gift,

• (b) by reason of the donor’s spouse or civil partner (“the relevant beneficiary”) becoming beneficially entitled to an interest in possession in the settled property, the disposal is or, as the case may be, is to any extent an exempt transfer by virtue of section 18 of the 1984 Act in consequence of the operation of section 49 of that Act (treatment of interests in possession),

• (c) at some time after the disposal, but before the death of the donor, the relevant beneficiary’s interest in possession comes to an end, and

• (d) on the occasion on which that interest comes to an end, the relevant beneficiary does not become beneficially entitled to the settled property or to another interest in possession in the settled property.

• (5B) If or, as the case may be, to the extent that this section applies by virtue of subsection (5A) above, it has effect as if the disposal by way of gift had been made immediately after the relevant beneficiary’s interest in possession came to an end.

• (5C) For the purposes of subsections (5A) and (5B) above—

• (a) section 51(1)(b) of the 1984 Act (disposal of interest in possession treated as coming to end of interest) applies as it applies for the purposes of Chapter 2 of Part 3 of that Act; and

• (b) references to any property or to an interest in any property include references to part of any property or interest.

• (6) This section does not apply if the disposal of property by way of gift is made under the terms of a policy issued in respect of an insurance made before 18th March 1986 unless the policy is varied on or after that date so as to increase the benefits secured or to extend the term of the insurance; and, for this purpose, any change in the terms of the policy which is made in pursuance of an option or other power conferred by the policy shall be deemed to be a variation of the policy.

• (7) If a policy issued as mentioned in subsection (6) above confers an option or other power under which benefits and premiums may be increased to take account of increases in the retail price index (as defined in section 8(3) of the 1984 Act) or any similar index pecified in the policy, then, to the extent that the right to exercise on or before 1st August 1986, the exercise of that option or power before that date shall be disregarded for the purposes of subsection (6) above.

• (7A) This section does not apply if—

• (a) the disposal of property by way of gift took place before 30 October 2024,

• (b) the property became settled property by virtue of the disposal and remained settled property at all times after the disposal and before the relevant time,

• (c) immediately before 30 October 2024, the property was excluded property for the purposes of the 1984 Act by virtue of section 48(3) or (3A) (as it had effect at that time), and

• (d) immediately before the relevant time, the property—

• (i) was situated outside the United Kingdom and was not property to which paragraph 2 or 3 of Schedule A1 to the 1984 Act applied (overseas property with value attributable to UK residential property), or

• (ii) was a holding in an authorised unit trust or a share in an open-ended investment company (within the meaning, in either case, of the 1984 Act).

• (7B) In subsection (7A), “the relevant time” means—

• (a) if the property ceases to meet the condition in subsection (2) at any time before the donor’s death, that time;

• (b) otherwise, the time of the donor’s death.

• (7C) In subsection (7A)(c), “for the purposes of the 1984 Act” includes for the purposes only of Chapter 3 of Part 3 of that Act (ten-year anniversary charges etc) because of the operation of section 81 of that Act (property moving between settlements).

• (8) Schedule 20 to this Act has effect for supplementing this section.

Treatment of certain debts and incumbrances

103

• (1) Subject to subsection (2) below, if, in determining the value of a person’s estate immediately before his death, account would be taken, apart from this subsection, of a liability consisting of a debt incurred by him or an incumbrance created by a disposition made by him, that liability shall be subject to abatement to an extent proportionate to the value of any of the consideration given for the debt or incumbrance which consisted of—

• (a) property derived from the deceased; or

• (b) consideration (not being property derived from the deceased)given by any person who was at the time entitled to, or amongst whose resources there were at any time included, any property derived from the deceased.

• (2) If, in the case where the whole or part of the consideration given for a debt or incumbrance consisted of such consideration as is mentioned in subsection (1)(b) above, it is shown that the value of the consideration given, or of that part thereof, as the case may be, exceeded that which could have been rendered available by application of all the property derived from the deceased, other than such (if any) of that property—

• (a) as is included in the consideration given, or

• (b) as to which it is shown that the disposition of which it, or the property which it represented, was the subject matter was not made with reference to, or with a view to enabling or facilitating, the giving of the consideration or the recoupment in any manner of the cost thereof, no abatement shall be made under subsection (1) above in respect of the excess.

• (3) In subsections (1) and (2) above “property derived from” means, subject to subsection (4) below, any property which was the subject matter of a dispostition made by the deceased, either by himself alone or in concert or by arrangement with any other person or which represented any of the subject matter of such a dispostition, whether directly or indirectly, and whether by virtue of on or more intermediate dispostitions.

• (4) If the dispostition first-mentioned in subsection (3) above was not a transfer of value and it is shown that the disposition was not part of associated operations which included—

• (a) a disposition by the deceased, either alone or in concert or by arrangement with any other person, otherwise than for full consideration in money or money’s worth paid to the deceased for his own use or benefit; or

• (b) a dispostition by any other person operating to reduce the value of the property of the deceased,

that first-mentioned dispostition shall be left out of account for the purposes of subsections (1) to (3) above.

• (5) If, before a person’s death but on or after 18th March 1986, money or money’s worth is paid or applied by him—

• (a) in or towards the satisfaction or discharge of a debt or incumbrance in the case of which subsection (1) above would have effect on his death if the debt or incumbrance had not been satisfied or discharged, or

• (b) in reduction of debt or incumbrance in the case of which that subsection has effect on his death,

the 1984 Act shall have effect as if, at the time of the payment or application, the person concerned had made a transfer of value equal to the money or money’s worth and that transfer were a potentially exempt transfer.

• (6) Any reference in this section to a debt is a reference to a debt incurred on or after 18th March 1986 and any reference to an incumbrance created by a disposition is a reference to an incumbrance created by an disposition made on or after that date; and in this section “subject matter” includes, in relation to any disposition, any annual or periodical payment made or payable under or by virtue of the disposition

• (7) In determining the value of a person’s estate immediately before his death, no account shall be taken (by virtue of section 5 of the 1984 Act) of any liability arising under or in connection with a policy of life insurance issued in respect of an insurance made on or after 1st July 1986 unless the whole of the sums assured under that policy form part of that person’s estate immediately before his death.

Regulations for avoiding double charges etc.

104

• (1) For the purposes of the 1984 Act the Board may by regulations make such provision as is mentioned in subsection (2) below with respect to transfers of value made, and other events occurring, on or after 18th March 1986 where—

• (a) a potentially exempt transfer proves to be a chargeable transfer and, immediately before the death of the transferor, his estate includes property acquired by him from the transferee otherwise than for full consideration in money or money’s worth;

• (b) an individual disposes of property by a transfer of value which is or proves to be a chargeable transfer and the circumstances are such that subsection (3) or subsection (4) of section 102 above applies to the property as being or having been property subject to a reservation;

• (c) in determining the value of a person’s estate immediately before his death, a liability of his to any person is abated as mentioned in section 103 above and, before his death, the deceased made a transfer of value by virtue of which the estate of that other person was increased or by virtue of which property becomes comprised in a settlement of which that other person is a trustee; or

• (d) the circumstances are such as may be specified in the regulations for the purposes of this subsection, being circumstances appearing to the Board to be similar to those referred to in paragraphs (a) to (c) above.

• (2) The provision which may be made by regulations under this section is provision for either or both of the following,—

• (a) treating the value transferred by a transfer of value as reduced by reference to the value transferred by another transfer of value ; and

• (b) treating the whole or any part of the tax paid or payable on the value transferred by a transfer of value as a credit against the tax payable on the value transferred by another transfer of value.

• (3) The power to make regulations under this section shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of the Commons House of Parliament.

Application of business and agricultural relief where transfer partly exempt

105

With respect to transfers of value made on or after 18th March 1986, after section 39 of the 1984 Act there shall be inserted the following section—

(39A) (1) Where any part of the value transferred by a transfer of value is attributable to— (a) the value of the relavant business property, or (b) the agricultural value of agricultural property, then, for the purpose of attributing the value transferred (as reduced in accordance with section 104 or 116 below), to specific gifts and gifts of residue, sections 38 and 39 above shall have effect subject to the following provisions of this section. (2) The value of any specific gifts of relevant business property or agricultural property shall be taken to be their value as reduced in accordance with section 104 or 116 below. (3) The value of any specific gifts not falling within subsection (2) above shall be taken to be the appropriate fraction of their value. (4) In subsection (3) above “the appropriate fraction” means a fraction of which— (a) the numerator is the difference between the value transferred and the value, reduced as mentioned in subsection (2) above, of any gifts falling within that subsection, and (b) the denominator is the difference between the unreduced value transferred and the value, before the reduction mentioned in subsection (2) above, of any gifts falling within that subsection; and in paragraph (b) above “the unreduced value transferred” means the amount which would be the value transferred by the transfer but for the reduction required by sections 104 and 116 below. (5) If or to the extent that specific gifts fall within paragraphs (a) and (b) of subsection (1) of section 38 above, the amount corresponding to the value of the gifts shall be arrived at in accordance with subsections (3) to (5) of that section by reference to their value reduced as mentioned in subsection (2) or, as the case may be, subsection (3) of this section. (6) For the purposes of this section the value of a specific gift of relevant business property or agricultural property does not include the value of any other gift out of that property; and that other gift shall not itself be treated as a specific gift of relevant business property or agricultural property. (7) In this section— - “agricultural property” and “the agricultural value of agricultural property” have the samemeaning as in Chapter II of Part V of this Act; and - “relevant business property” has the same meaing as in Chapter I of that Part.

Changes in financial institutions: business property

106

• (1) In section 105 of the 1984 Act (relevant business property) the following shall be substituted for subsection (4)(a)—

(a) does not apply to any property if the business concerned is wholly that of a market maker or is that of a discount house and (in either case) is carried on in the United Kingdom, and

.

• (2) At the end of that section there shall be inserted—

(7) In this section “market maker” means a person whom— (a) holds himself out at all normal times in compliance with the rules of The Stock Exchange as willing to buy and sell securities, stocks and shares at a price specified by him, and (b) is recognised as doing so by the Council of The Stock Exchange.

• (3) Subsections (1) and (2) above apply in relation to transfers of value made, and otehr events occurring, on or after the day of the Stock Exchange reforms.

• (4) The Board may by regulations provided that section 105(7) of the 1984 Act (as inserted by subsection (2) above) shall have effect—

• (a) as if the reference to The Stock Exchange in paragraph (a) were to any recognised investment exchange (within the meaning given by section 285(1)(a) of the Financial Services and Markets Act 2000) or to any of those exchanges specified in the regulations, and

• (b) as if the reference to the Council of Stock Exchange in paragraph (b) were to the investment exchange concerned.

• (5) The Board may by regulations amend section 105 of the 1984 Act so as to secure that section 105(3) does not apply to any property if the business concerned is of such description as is set out in the regulations; and the regulations may include such incidental and consequential provisions as the Board think fit.

• (6) Regulations under subsection (4) or (5) above shall apply in relation to transfers of value made, and other events occurring, on or after such day, after the Stock Exchange reforms, as is specified in the regulations.

• (7) The power to make regulations under subsection (4) and (5) above shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of the Commons House of Parliament.

• (8) In this section “the day of the Stock Exchange reforms” means trhe day on which the rule of The Stock Exhcange that prohibits a person from carrying on business as both a broker and a jobber is abolished .

Changes in financial institutions: interest

107

• (1) In section 234 of the 1984 Act (interest in instalments) the following shall be substituted for subsection (3)(c)—

(c) any company whose business is wholly that of a amrket maker or is that of a discount house and (in either case) is carried on in the United Kingdom.

• (2) At the end of that section there shall be inserted—

(4) In this section “market maker” means a person who— (a) holds himself out at all normal times in compliance with the rules of The Stock Exchange as willing to buy and sell securities, stocks or shares at a price specified by him, and (b) is recognised as doing so by the Council of The Stock Exchange.

• (3) Subsections (1) and (2) above apply in relation to chargeable transfers made, and other events occurring, on or after the day of The Stock Exchange reforms.

• (4) The Board may by regulations provide that section 234(4) of the 1984 Act (as inserted by subsection (2) above) shall have effect—

• (a) as if the reference to The Stock Exchange in paragraph (a) were to any recognised investment exchange (within the meaning given by section 285(1)(a) of the Financial Services and Markets Act 2000) or to any of those exchanges specified in the regulations, and

• (b) as if the reference to the Council of The Stock Exchange in paragraph (b) were to the investment exchange concerned.

• (5) The Board may by regulations amend section 234 of the 1984 Act so as to secure that companies of a description set out in the regulations fall within section 234(3)(c); and the regulations may include such incidental and consequential provisions as the Board think fit.

• (6) Regulations under subsection (4) or (5) above shall apply in relation to chargeable transfers made, and by other events occurring, on or after such day, after the day of The Stock Exchange reforms, as is specified in the regulations.

• (7) The power to make regulations under subsection (4) or (5) above shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of the Commons House of Parliament.

• (8) In this section “the day of The Stock Exchange reforms” has the same meaning as in section 106 above.

PART VI — OIL TAXATION

The on-shore/off-shore boundary

108

• (1) For the purposes of the enactments relating to oil taxation, land lying between the landward boundary of the territorial sea and the shoreline of the United Kingdom (as defined below) shall be treated as part of the bed of the territorial sea of the United Kingdom and any reference in those enactments to the territorial sea or the subsoil beneath it shall be construed accordingly.

• (2) Any reference to the United Kingdom in the enactments relating to oil taxation, where that reference is a reference to a geographical area, shall be treated as a reference to the United Kingdom exclusive of the land referred to in subsection (1) above and of any waters for the time being covering that land.

• (3) In this section—

• (a) “the landward boundary of the territorial sea” means the line for the time being ordered by Her Majesty in Council to be the baseline from which the breadth of the territorial sea is measured; and

• (b) “the shoreline of the United Kingdom” means, subject to subsection (4) below, the high-water line along the coast, including the coast of all islands comprised in the United Kingdom.

• (4) In the case of waters adjacent to a bay, as defined in the Territorial Waters Order in Council 1964, the shoreline means—

• (a) if the bay has only one mouth and the distance between the high-water lines of the natural entrance points of the bay does not exceed 5,000 metres, a straight line joining those high-water lines;

• (b) if, because of the presence of islands, the bay has more than one mouth and the distances between the high-water lines of the natural entrance points of each mouth added together do not exceed 5,000 metres, a series of straight lines across each of the mouths drawn so as to join those high-water lines; and

• (c) if neither paragraph (a) nor paragraph (b) above applies, a straight line 5,000 metres in length drawn from high-water line to high-water line within the bay in such a manner as to enclose the maximum area of water that is possible with a line of that length.

• (5) If, by virtue of this section, it becomes necessary at any time to establish the high-water line at any place, it shall be taken to be the line which, on the current Admiralty chart showing that place, is depicted as “the coastline”, and for this purpose,—

• (a) an Admiralty chart means a chart published under the superintendence of the Hydrographer of the Navy;

• (b) if there are two or more Admiralty charts of different scales showing the place in question and depicting the coastline, account shall be taken only of the largest scale chart; and

• (c) subject to paragraph (b) above, the current Admiralty chart at any time is that most recently published before that time.

• (6) In this section “the enactments relating to oil taxation” means Part I of the Oil Taxation Act 1975 and any enactment which is to be construed as one with that Part.

• (7) This section shall be deemed to have come into force on 1st April 1986.

Alternative valuation of light gases

109

• (1) Where an election is made under this section before 1st January 1994 and accepted by the Board, the market value for the purposes of the Oil Taxation Acts of any light gases to which the election applies shall be determined, not in accordance with paragraphs 2, 2A and 3 of Schedule 3 to the principal Act (value under a notional contract), but by reference to a price formula specified in the election; and, in relation to any such light gases, any reference to market value in any other provision of the Oil Taxation Acts shall be construed accordingly.

• (2) No election may be made under this section in respect of light gases which are “ethane” as defined in subsection (6)(a) of section 134 of the Finance Act 1982 (alternative valuation of ethane used for petrochemical purposes) if the principal purpose for which the gases are being or are to be used is that specified in subsection (2)(b) of the said section 134 (use for petrochemical purposes).

• (3) Subject to subsection (4) below, an election under this section applies only to light gases—

• (a) which, during the period covered by the election, are either disposed of otherwise than in sales at arm’s length or relevantly appropriated; and

• (b) which are not subject to fractionation between the time at which they are so disposed of or appropriated and the time at which they are applied or used for the purposes specified in the election.

• (4) In any case where,—

• (a) at a time during the period covered by an election, a market value falls to be determined for light gases to which subsection (4)(b) or (5)(d) of section 2 of the principal Act applies (oil stocks at the end of chargeable periods), and

• (b) after the expiry of the chargeable period in question, the light gases are disposed of or appropriated as mentioned in subsection (3) above,

the market value of those light gases at the time referred to in paragraph (a) above shall be determined as if they were gases to which the election applies.

• (5) Schedule 18 to the Finance Act 1982 (which applies to elections under section 134 of that Act relating to ethane used or to be used for petrochemical purposes) shall have effect for supplementing this section but subject to the modifications in Schedule 21 to this Act (in which “the 1982 Schedule” means the said Schedule 18).

• (6) This section shall be construed as one with Part I of the principal Act and in this section—

• (a) “light gases” means oil consisting of gas of which the largest component by volume over any chargeable period is methane or ethane or a combination of those gases and which—

• (i) results from the fractionation of gas before it is disposed of or appropriated as mentioned in subsection (3)(a) above, or

• (ii) before being so disposed of or appropriated, is not subjected to initial treatment or is subjected to initial treatment which does not include fractionation;

• (b) “the principal Act” means the Oil Taxation Act 1975; and

• (c) “the Oil Taxation Acts” means Part I of the principal Act and any enactment which is to be construed as one with that Part.

• (7) In this section “fractionation” means the treatment of gas in order to separate gas of one or more kinds as mentioned in paragraph 2A(3) of Schedule 3 to the principal Act; and for the purposes of subsection (6)(a) above,—

• (a) the proportion of methane, ethane or a combination of the two in any gas shall be determined at a temperature of 15[2B]dgC and at a pressure of one atmosphere; and

• (b) any component other than methane, ethane or liquified petroleum gas shall be disregarded.

Attribution of certain receipts and expenditure between oil fields

110

• (1) Section 8 of the Oil Taxation Act 1983 (qualifying assets) shall have effect, and be deemed always to have had effect, subject to the amendments in subsections (2) and (3) below.

• (2) In subsection (3) (which determines the oil field to which are attributable tariff receipts or disposal receipts referable to a qualifying asset) after the word “above”, both where it occurs in paragraph (c) and also in the words following paragraph (c), there shall be inserted “and subsection (3A) below”.

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

(3A) If development decisions were first made in relation to two or more oil fields on the same day, then, for the purposes of subsection (3)(c) above, it shall be conclusively presumed that the first of those decisions was made in relation to that one of those fields in connection with which it appeared— (a) at the time of the decision, or (b) if it is later, at the time the asset was acquired or brought into existence by the participator in question for use in connection with an oil field, that the participator in question would make the most use of the asset.

• (4) Paragraph 6 of Schedule 1 to the Oil Taxation Act 1983 (attribution of allowable expenditure) shall have effect and be deemed always to have had effect with the addition of the following sub-paragraph—

(3) Subsection (3A) of section 8 of this Act applies for the purposes of sub-paragraph (1) above as it applies for the purposes of subsection (3)(c) of that section.

Part VII — Miscellaneous and Supplementary

Broadcasting: additional payments by programme contractors

111

• (1) The Broadcasting Act 1981 shall have effect with respect to additional payments payable by programme contractors under that Act subject to the amendments made by Part I of Schedule 22 to this Act.

• (2) The transitional provisions made by Part II of that Schedule shall have effect.

• (3) This section shall be deemed to have come into force on 1st April 1986.

Limit for local loans

112

In section 4(1) of the National Loans Act 1968 (which provides that the aggregate of any commitments of the Public Works Loan Commissioners in respect of undertakings to grant local loans and any amount outstanding in respect of the principal of such loans shall not exceed £28,000 million or such other sum not exceeding £35,000 million as the Treasury may specify by order) for the words “£28,000 million” and “£35,000 million” there shall be substituted respectively “£42,000 million” and “£50,000 million”.

"Securities" for purposes of Exchange Equalisation Account Act 1979

113

—At the end of section 3 of the Exchange Equalisation Account Act 1979 (investment of the funds of the Exchange Equalisation Account) there shall be added the following subsection—

(4) Without prejudice to the reference in subsection (1)(b) above to special drawing rights, the reference in subsection (3) above to currency of any country includes a reference to units of account defined by reference to more than one currency.

Short title, interpretation, construction and repeals

114

• (1) This Act may be cited as the Finance Act 1986.

• (2) In this Act “the Taxes Act” means the Income and Corporation Taxes Act 1970.

• (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 the Stamp Act 1891.

• (5) Part V of this Act, other than section 100, shall be construed as one with the Capital Transfer Tax Act 1984.

• (6) The enactments and Orders specified in Schedule 23 to this Act are hereby repealed to the extent specified in the third column of that Schedule, but subject to any provision at the end of any Part of that Schedule.

SCHEDULE 1

Part I — Provision Substituted for Part II of Schedule 2 to the Acts of 1971 and 1972

Part II — Tables Substituted in Part II of Schedule 4 to the Acts of 1971 and 1972

SCHEDULE 2

Part I

Additional days to be included in duration of certain licences

1

• (1) In the Vehicles (Excise) Act 1971 (in this Part of this Schedule referred to as “the 1971 Act”), section 2A (power to modify duration of licences and rates of duty) as set out in paragraph 5 of Schedule 7 to that Act (transitional provisions) shall be amended as follows.

• (2) In subsection (1) after paragraph (a) there shall be inserted the following paragraph—

(aa) in the case of licences taken out on the first registration of vehicles of such description as may be so specified, periods exceeding by such number of days (not exceeding thirty) as may be determined by or under the order the periods for which the licence would otherwise have effect by virtue of section 2(1) above or any provision made under paragraph (a) above; or

.

• (3) In subsection (2), in paragraph (a) of the proviso, for the words “other than one of twelve months” there shall be substituted the words “of a fixed number of months other than twelve or for a period of less than a month”.

Tower wagons used by street lighting authorities etc.

2

In section 4 of the 1971 Act (exemptions from duty) in subsection (2) for the definition of “tower wagon” there shall be substituted the following—

“tower wagon” means a goods vehicle— (a) into which there is built, as part of the vehicle, any expanding or extensible contrivance designed for facilitating the erection, inspection, repair or maintenance of overhead structures or equipment, and (b) which is neither constructed nor adapted for use nor used for the conveyance of any load other than— (i) such a contrivance and articles used in connection therewith, and (ii) articles used in connection with the installation or maintenance, by means of such a contrivance, of materials or apparatus for lighting streets, roads or public places

.

Visiting forces

3

In section 7 of the 1971 Act (miscellaneous exemptions from duty) after subsection (3) there shall be inserted the following subsection—

(3A) Regulations under this Act may provide that, in such cases, subject to such conditions and for such period as may be prescribed, a mechanically propelled vehicle shall not be chargeable with any duty under this Act if it has been imported by— (a) a person for the time being appointed to serve with any body, contingent or detachment of the forces of any prescribed country, being a body, contingent or detachment which is for the time being present in the United Kingdom on the invitation of Her Majesty’s Government in the United Kingdom, or (b) a member of any country’s military forces, except Her Majesty’s United Kingdom forces, who is for the time being appointed to serve in the United Kingdom under the orders of any prescribed organisation, or (c) a person for the time being recognised by the Secretary of State as a member of a civilian component of such a force as is mentioned in paragraph (a) above or as a civilian member of such an organisation as is mentioned in paragraph (b) above, or (d) any prescribed dependant of a person falling within paragraph (a), paragraph (b) or paragraph (c) above.

Trade licences

4

• (1) Section 16 of the 1971 Act (trade licences) shall be amended as follows.

• (2) In subsection (1) (issue of trade licences)—

• (a) at the end of paragraph (iii) (vehicles for which a manufacturer may use a trade licence) there shall be inserted the words “and all vehicles which are from time to time submitted to him by other manufacturers for testing on roads in the course of that business”; and

• (b) at the beginning of paragraph (c) of the proviso (restrictions on use of trade licence) there shall be inserted the words “except in such circumstances as may be prescribed”.

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

(1A) Subsection (1) above has effect in relation to an application made by a person who satisfies the Secretary of State that he intends to commence business as a motor trader or vehicle tester as it has effect in relation to an application made by a motor trader or vehicle tester.

• (4) In subsection (3) (which specifies the cases in which regulations may allow a vehicle to be used under a trade licence to carry a load) after paragraph (b) there shall be inserted the following paragraph—

(bb) in the case of a vehicle is being delivered or collected, a load consisting of another vehicle used or to be used for travel from or to the place of delivery or collection; or

.

• (5) Subsection (4) (duration of trade licence) shall be amended as follows—

• (a) for the words “A trade licence”. . . to the 1971 Act, there shall be substituted “Subject to subsections (4A) and (4B) below, a trade licence”;

• (b) for paragraph (b) there shall be substituted—

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

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

(4A) A trade licence taken out by a person who is not a motor trader or vehicle tester (having satisfied the Secretary of State as mentioned in subsection (1A) above) shall be for a period of six months only. (4B) The Secretary of State may require that a trade licence taken out by a motor trader or vehicle tester who does not hold any existing trade licence shall be for a period of six months only.

• (7) Subsection (5) (fees) shall be amended as follows—

• (a) for the words “four months” and “eleven thirtieths” there shall be substituted respectively “six months” and “eleven twentieths”; and

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

• (8) In subsection (8), in the definition of “motor trader”, for the words from “means” to “this section” there shall be substituted

means— (a) a manufacturer or repairer of, or dealer in, mechanically propelled vehicles, or (b) any person not falling within paragraph (a) above who carries on a business of such description as may be prescribed; and a person shall be treated for the purposes of paragraph (a) above

.

Surrender of licences

5

In section 17(2) of the 1971 Act (surrender of licences) as set out in paragraph 13 of Part I of Schedule 7 to the Act, paragraph (a) and, in paragraph (b), the words from the beginning to “class” shall be omitted.

Removal of fee for duplicate registration document

6

Section 23 of the 1971 Act (regulations with respect to the transfer and identification of vehicles) shall be amended as follows—

• (a) in paragraph (f) (replacement documents) the words “and as to the fee payable in prescribed circumstances in respect of any replacement” shall be omitted; and

• (b) in the section as set out in paragraph 20 of Part I of Schedule 7 to the Act in subsection (1)(e) (replacement books) the words “and for the fee to be paid on the issue of a new registration book” shall be omitted.

Part II

Additional days to be included in duration of certain licences

7

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

Tower wagons used by street lighting authorities etc.

8

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

Trade licences

9

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

Surrender of licences

10

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

Removal of fee for duplicate registration document

11

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

SCHEDULE 3

1

Section 93 of the Customs and Excise Management Act 1979 (warehousing regulations) shall be amended in accordance with paragraphs 2 to 7 below.

2

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

3

The following shall be inserted after subsection (2)(e)—

(ee) providing that goods which are to be warehoused, or which have been lawfully permitted to be removed from a warehouse without payment of duty, are to be treated as if, for all or any prescribed purposes of the customs and excise Acts, they were warehoused;

.

4

The following shall be substituted for subsection (2)(g) (business records)—

(g) imposing or providing for the imposition under the regulations of requirements on the occupier of a warehouse or the proprietor of goods in a warehouse or goods which have been in or are to be deposited in a warehouse to keep and preserve such records as may be prescribed relating to his occupation of the warehouse or proprietorship of the goods; (h) imposing or providing for the imposition under the regulations of requirements on such an occupier or proprietor to preserve all other records kept by him for the purposes of any relevant business or activity, except any records which (or records of a class which) the Commissioners specify as not needing preservation; (j) imposing or providing for the imposition under the regulations of requirements on such an occupier or proprietor to produce or cause to be produced any records which he has been required to preserve by virtue of paragraph (g) or (h) above to an officer when required to do so for the purpose of allowing the officer to inspect them, to copy or take extracts from them or to remove them at a reasonable time and for a reasonable period; (k) imposing or providing for the imposition under the regulations of requirements on such an occupier or proprietor to furnish the Commissioners with any information relating to any relevant business or activity which they specify as information which they think it is necessary or expedient for them to be given for the protection of the revenue; (l) allowing a requirement to preserve any records which has been imposed by virtue of paragraph (h) above to be discharged by the preservation in a form approved by the Commissioners of the information contained in the records.

5

The following shall be inserted at the end of subsection (2)—

In this subsection ”relevant business or activity’ means, in relation to an occupier or proprietor, any business or activity of his which includes occupation of a warehouse or (as the case may be) proprietorship of goods in a warehouse or goods which have been in or are to be deposited in a warehouse, where the goods are of a kind in which the proprietor trades or deals.

6

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

7

The following shall be substituted for subsection (7) (interpretation)—

(7) In this section— (a) “prescribed” means prescribed by warehousing regulations; (b) references to goods which are to be warehoused are references to goods which have been entered for warehousing on importation, which have been removed from a producer’s premises for warehousing without payment of duty or which are to be warehoused on drawback.

8

In consequence of the amendments made by the preceding provisions of this Schedule, the following provisions of section 15 of the Alcoholic Liquor Duties Act 1979 (which relate to regulations about distillers’ warehouses) shall cease to have effect—

• (a) subsections (6A) and (6B), and

• (b) the words “restriction or requirement” in subsection (7) and in subsection (8).

SCHEDULE 4

Part I — Amendments of the Betting and Gaming Duties Act 1981

General betting duty and pool betting duty

1

• (1) In section 1 (general betting duty) in subsection (1) for the words “Great Britain” there shall be substituted “the United Kingdom”.

• (2) In subsection (3) of that section after the words “Act 1963” there shall be inserted the words “or Article 37 of the Betting, Gaming, Lotteries and Amusements (Northern Ireland) Order 1985”.

2

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

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

3

• (1) In section 9 (prohibitions for protection of revenue) for the words “Great Britain”, wherever they occur, there shall be substituted “the United Kingdom”.

• (2) In subsection (3)(a) of that section the words “Northern Ireland or” and “of the Parliament of Northern Ireland or, as the case may be,” shall be omitted.

4

In section 12(4) (interpretation of provisions relating to betting duties)—

• (a) before the definition of “meeting” there shall be inserted the following definitions—

“betting office licence”— (a) in Great Britain, has the meaning given by section 9(1) of the Betting, Gaming and Lotteries Act 1963, and (b) in Northern Ireland, means a bookmaking office licence as defined in Article 2(2) of the Betting, Gaming, Lotteries and Amusements (Northern Ireland) Order 1985; “bookmaker”— (a) in Great Britain, has the meaning given by section 55(1) of the said Act of 1963, and (b) in Northern Ireland, has the meaning given by Article 2(2) of the said Order of 1985; and (in either case) the expression ”bookmaking’ shall be construed accordingly; “bookmaker’s permit”— (a) in Great Britain, has the meaning given by section 2(1) of the said Act of 1963, and (b) in Northern Ireland, means a bookmaker’s licence as defined in Article 2(2) of the said Order of 1985;

;

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

• (c) the words from “and ”betting office licence”’to the end shall be omitted.

Bingo duty

5

In section 17(1) (charge of bingo duty) for the words “Great Britain” there shall be substituted “the United Kingdom”.

6

In section 19(2) (bingo played in more than one place)—

• (a) for the words “Great Britain”, in both places where they occur, there shall be substituted “the United Kingdom”; and

• (b) the words “Northern Ireland or” and the words “the Parliament of Northern Ireland or, as the case may be,” shall be omitted.

7

In section 20(2) (interpretation of provisions relating to bingo duty) the definition of “Great Britain” shall be omitted and after the definition of “the promoter” there shall be inserted the following definition—

”United Kingdom’ includes the territorial waters of the United Kingdom;

.

General

8

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

9

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

10

• (1) In section 35, for subsection (3) (extent) there shall be substituted—

(3) The following provisions of this Act do not extend to Northern Ireland— (a) sections 13 to 16; (b) sections 29 and 30; (c) Schedule 2; (d) paragraph 15 of Schedule 4; and sections 27 and 31 do not extend there in their application to the enactment relating to gaming licence duty.

• (2) Subsection (4) of that section shall be omitted.

Administration of betting duties

11

• (1) In Schedule 1 (betting duties) ....

• (2) In paragraph 15 of that Schedule—

• (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

• (c) after that sub-paragraph there shall be inserted the following sub-paragraphs—

(5) Subject to sub-paragraph (6) below, where under sub-paragraph (1) above a court orders that a betting office licence held by a person in respect of premises in Northern Ireland shall be forfeited and cancelled, no court of summary jurisdiction shall entertain an application by that person for the grant (or provisional grant) of a new betting office licence in respect of those premises or any other premises situated in the same petty sessions district as those premises made less than twelve months after that forfeiture and cancellation. (6) Sub-paragraph (5) above— (a) shall not prejudice the right of such a person as is mentioned in that sub-paragraph to seek the renewal of any betting office licence (other than that which is forfeited) which he holds; and (b) applies notwithstanding anything in Article 12 of the Betting, Gaming, Lotteries and Amusements (Northern Ireland) Order 1985.

.

Exemptions from, and administration of, bingo duty

12

• (1) In Schedule 3 in paragraph 2(1) (small-scale bingo) after the words “Act 1968” there shall be inserted the words “or under Chapter II of Part III of the Betting, Gaming, Lotteries and Amusements (Northern Ireland) Order 1985”.

• (2) In paragraph 5 of that Schedule (small-scale amusements provided commercially) in sub-paragraph (1) after paragraph (a) there shall be inserted the following paragraph—

(aa) on any premises in Northern Ireland in respect of which an amusement permit under Article 111 of the Betting, Gaming, Lotteries and Amusements (Northern Ireland) Order 1985 or a pleasure permit under Article 157 of that Order has been granted;

.

• (3) In paragraph 10(2) of that Schedule (registration of bingo-promoters) after the words “Act 1968” there shall be inserted the words “or under Chapter II of Part III of the Betting, Gaming, Lotteries and Amusements (Northern Ireland) Order 1985”.

Part II — Consequential Amendments of Northern Ireland Legislation

13

In section 287(1)(a) of the Companies Act (Northern Ireland) 1960 (preferential payments), for head (iv) there shall be substituted the following head—

(iv) any amount due from the company at the relevant date by way of general betting duty or bingo duty, or by virtue of section 12(1) of the Betting and Gaming Duties Act 1981, which became due within 12 months next before that date;

.

14

In Article 19(a) of the Bankruptcy Amendment (NorthernIreland) Order 1980 (preferential payments), for head (v) there shall be substituted the following head—

(v) any amount due from the bankrupt at the relevant date by way of general betting duty or bingo duty, or by virtue of section 12(1) of the Betting and Gaming Duties Act 1981, which became due within 12 months next before that date;

.

15

• (1) The Betting, Gaming, Lotteries and Amusements (Northern Ireland) Order 1985 shall be amended as follows.

• (2) In Article 7, after paragraph (4), there shall be inserted the following paragraph—

(4A) In considering the fitness of any applicant to hold a bookmaker’s licence, the court shall have regard to— (a) any failure of the applicant or of any other person mentioned in paragraph (3)(b); and (b) where the applicant is a body corporate, any failure of any director of the applicant or of any other person mentioned in paragraph (4); to pay any amount due from him or it by way of general betting duty or pool betting duty.

.

• (3) In Article 61, after paragraph (4) there shall be inserted the following paragraph—

(4A) In considering the fitness of any applicant to hold a bingo club licence, a court shall have regard to— (a) any failure of the applicant or of any other person mentioned in paragraph (3)(b); and (b) where the applicant is a body corporate, any failure of any director of the applicant or of any other person mentioned in paragraph (4); to pay any amount due from him or it by way of bingo duty.

.

• (4) In Article 174 (registration of licences, etc)—

• (a) in paragraph (2), after head (g) there shall be inserted the following head—

(gg) particulars of the forfeiture and cancellation of any bookmaking office licence in consequence of an order made under paragraph 15(1) of Schedule 1 to the Betting and Gaming Duties Act 1981;

;

• (b) in paragraph (4), after head (b) there shall be inserted the following—

or (c) orders the forfeiture and cancellation of a book-making office licence under paragraph 15(1) of Schedule 1 to the Betting and Gaming Duties Act 1981;

.

• (5) In the following provisions, namely—

• (a) Article 2(16), in so far as it is relevant for the purposes of the provisions mentioned in heads (b) and (c);

• (b) Article 185(3) and Schedule 7, in so far as those provisions relate to a bookmaker’s licence, a bookmaking office licence or a bingo club licence; and

• (c) Schedules 1 to 6 and Schedules 9 and 10;

any reference to the sub-divisional commander of the police sub-division shall be construed as including a reference to the Collector of Customs and Excise for the area, and any reference to the police sub-division shall be construed as including a reference to the area for which the Collector is responsible.

Part III — Subordinate Legislation

16

• (1) Any regulations made under Schedule 1 (betting duties) to the Betting and Gaming Duties Act 1981, in so far as they have effect immediately before the betting commencement date, shall have effect on and after that date in relation to Northern Ireland as if—

• (a) that Act extended to Northern Ireland at the time when the regulations were made, and

• (b) the regulations were made in relation to Northern Ireland as well as to Great Britain.

• (2) Any orders or regulations made under Schedule 3 (bingo duty) to that Act, in so far as they have effect immediately before the bingo commencement date, shall have effect on and after that date in relation to Northern Ireland as if—

• (a) that Act extended to Northern Ireland at the time when the orders or regulations were made, and

• (b) the orders or regulations were made in relation to Northern Ireland as well as to Great Britain.

SCHEDULE 5

General provisions as to payment of duty on excise licences

1

In section 101 of the Customs and Excise Management Act 1979 (grant of excise licences)—

• (a) in subsection (1), for the words “the appropriate duty” there shall be substituted “any appropriate duty”; and

• (b) in subsection (3), for the words “taken out” there shall be substituted “held” and for the words “in any one licence year” there shall be substituted “at any one time”.

2

In sections 102(1) and 104(3) of the Customs and Excise Management Act 1979 (payment for and transfer of excise licences), for the words “the duty” there shall be substituted “any duty”.

Licences to manufacture spirits

3

• (1) Section 12 of the Alcoholic Liquor Duties Act 1979 (distillers’ licences) shall be amended in accordance with this paragraph.

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

• (3) At the end of subsection (5) there shall be added the words “and where the largest still so used on any premises in respect of which a licence is held is of less than that capacity, the Commissioners may revoke the licence or attach to it such conditions as they see fit to impose”.

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

Licences relating to hydrocarbon oil etc.

4

In Schedule 3 to the Hydrocarbon Oil Duties Act 1979 (subjects for regulations under section 21 of that Act), in paragraphs 2, . . . and 18 (which relate to licences for the production etc. of hydrocarbon oil, petrol substitutes and road fuel gas respectively) for the words “Fixing the date of expiration of any such licence” there shall be substituted “Specifying the circumstances in which any such licence may be surrendered or revoked”.

Licences to manufacture mechanical lighters

5

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

SCHEDULE 6

1

This Schedule has effect to determine the consideration referred to in subsection (7) of section 9 of this Act in respect of any one vehicle; and in this Schedule—

• (a) “the principal section” means that section;

• (b) “the prescribed accounting period” means that in respect of supplies in which the consideration is to be determined; and

• (c) “the individual” means the individual to whom those supplies are treated as made.

2

• (1) . . .Where the prescribed accounting period is a period of three months, the consideration appropriate to any vehicle is that specified in relation to a vehicle of the appropriate description in the second column of Table A below.

• (2) . . .Where the prescribed accounting period is a period of one month, the consideration appropriate to any vehicle is that specified in relation to a vehicle of the appropriate description in the third column of Table A below.

Description of vehicle (Type of engine and cylinder capacity in cubic centimetres)	3 month period	1 month period
	£	£
Diesel engine	Diesel engine	Diesel engine
2000 or less	145	48
More than 2000	187	62
Any other type of engine	Any other type of engine	Any other type of engine
1400 or less	160	53
More than 1400 but not more than 2000	202	67
More than 2000	300	100

3

4

The Treasury may by order taking effect from the beginning of any prescribed accounting period beginning after the order is made substitute a different Table for either of the Tables set out above.

5

• (1) Where, by virtue of subsection (8) of the principal section, subsection (7) of that section has effect as if, in the prescribed accounting period, supplies of fuel for private use made in respect of two or more vehicles were made in respect of only one vehicle, the consideration appropriate shall be determined as follows—

• (a) if each of the two or more vehicles falls within the same description of cubic capacity specified in Table A or Table B above, the Table in question shall apply as if only one of the vehicles were to be considered throughout the whole period; and

• (b) if one of those vehicles falls within a description of cubic capacity specified in those Tables which is different from the other or others the consideration shall be the aggregate of the relevant fractions of the consideration appropriate for each description of vehicle under the Table in question.

• (2) For the purposes of sub-paragraph (1)(b) above, the relevant fraction in relation to any vehicle is that which the part of the prescribed accounting period in which fuel for private use was supplied in respect of that vehicle bears to the whole of that period.

6

• (1) In the case of a vehicle having an internal combustion engine one or more reciprocating pistons, its cubic capacity for the purposes of Tables A and B above is the capacity of its engine as calculated for the purposes of the Vehicles (Excise) Act 1971 or the Vehicles (Excise) Act (Northern Ireland) 1972.

• (2) In the case of a vehicle not falling within sub-paragraph (1) above, its cubic capacity shall be such as may be determined for the purposes of Tables A and B above by order by the Treasury.

SCHEDULES 7, 8. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART I — Qualifying expenditure

1

• (1) In the principal section "qualifying expenditure", in relation to a chargeable period of a charity, means, subject to sub-paragraph (3) below, expenditure incurred in that period for charitable purposes only.

• (2) For the purposes of the principal section (and sub-paragraph (1) above), where expenditure which is not actually incurred in a particular chargeable period properly falls to be charged against the income, of that chargeable period as being referable to commitments (whether or not of a contractual nature) which the charity has entered into before or during that period, it shall be treated as incurred in that period.

• (3) A payment made (or to be made) to a body situated outside the United Kingdom shall not be qualifying expenditure by virtue of this Part of this Schedule unless the charity concerned has taken such steps as may be reasonable in the circumstances to ensure that the payment will be applied for charitable purposes.

PART II — Qualifying Investments

2

Investments specified in any of the following paragraphs of this Part of this Schedule are qualifying investments for the purposes of the principal section.

3

Any investment falling within Part I, Part II, apart from paragraph 13 (mortgages etc.), or Part III of Schedule I to the Trustee Investments Act 1961.

4

Any investment in a common investment fund established under section 22 of the Charities Act 1960 or section 25 of the Charities Act (Northern Ireland) 1964 or in any similar fund established for the exclusive benefit of charities by or under any enactment relating to any particular charities or class of charities.

5

Any interest in land, other than an interest held as security for a debt of any description.

6

Shares in, or securities of, a company which are quoted on a recognised stock exchange (within the meaning of section 535 of the Taxes Act), or which are dealt in on the Unlisted Securities Market.

7

• (1) Units, or other shares of the investments subject to the trusts, of a unit trust scheme within the meaning of the Financial Services Act 1986.

• (2) Until the passing of the Financial Services Act 1986, the reference in sub-paragraph (1) above to that Act shall have effect as a reference to the Prevention of Fraud (Investments) Act 1958.

8

• (1) Deposits with a recognised bank or licensed institution (within the meaning of the Banking Act 1979) in respect of which interest is payable at a commercial rate.

• (2) A deposit mentioned in sub-paragraph (1) above is not a qualifying investment if it is made as part of an arrangement under which a loan is made by the recognised bank or licensed institution to some other person.

9

Certificates of deposit as defined in section 55(3) of the Finance Act 1968.

10

• (1) Any loan or other investment as to which the Board are satisfied, on a claim made to them in that behalf, that the loan or other investment is made for the benefit of the charity and not for the avoidance of tax (whether by the charity or any other person).

• (2) The reference in sub-paragraph (1) above to a loan includes a loan which is secured by a mortgage or charge of any kind over land.

PART III — Qualifying Loans

11

For the purposes of the principal section, a loan which is not made by way of investment is a qualifying loan if it consists of—

• (a) a loan made to another charity for charitable purposes only; or

• (b) a loan to a beneficiary of the charity which is made in the course of carrying out the purposes of the charity; or

• (c) money placed on a current account with a recognised bank or licensed institution (within the meaning of the Banking Act 1979) otherwise than as part of such an arrangement as is mentioned in paragraph 8(2) above; or

• (d) any other loan as to which the Board are satisfied, on a claim made to them in that behalf, that the loan is made for the benefit of the charity and not for the avoidance of tax (whether by the charity or any other person).

PART IV — Attribution of Excess Non-Qualifying Expenditure to earlier Chargeable Periods

12

This part of this Schedule applies in the circumstances specified in subsection (6) of the principal section; and in this Part of this Schedule—

• (a) "the primary period" means the chargeable period of the charity concerned in which there is such an excess as is mentioned in that subsection;

• (b) "unapplied non-qualifying expenditure" means so much of the excess referred to in that subsection as does not exceed the non-qualifying expenditure of the primary period; and

• (c) "earlier period", in relation to an amount of unapplied nonqualifying expenditure, means any chargeable period of the charity concerned which ended not more than six years before the end of the primary period.

13

• (1) So much of the unapplied non-qualifying expenditure as is not shown by the charity to be the expenditure of non-taxable sums received by the charity in the primary period shall be treated in accordance with paragraph 14 below as non-qualifying expenditure of earlier periods.

• (2) In sub-paragraph (1) above "non-taxable sums" means donations, legacies and other sums of a similar nature which, apart from any provision of the enactments conferring exemption from tax, are not within the charge to tax.

14

• (1) Where, in accordance with paragraph 13 above, an amount of unapplied non-qualifying expenditure (in this paragraph referred to as "the excess expenditure") falls to be treated as non-qualifying expenditure of earlier periods.—

• (a) it shall be attributed only to those earlier periods (if any) in which, apart from the attribution (but taking account of any previous operation of this paragraph) the relevant income and gains exceed the aggregate of the qualifying and non-qualifying expenditure incurred in that period; and

• (b) the amount to be attributed to any such earlier period shall not be greater than the excess of that period referred to in paragraph (a) above.

• (2) Where there is more than one earlier period to which the excess expenditure can be attributed in accordance with sub-paragraph (1) above, it shall be attributed to later periods in priority to earlier periods.

• (3) In so far as any of the excess expenditure cannot be attributed to earlier periods in accordance with this paragraph, it shall be disregarded for the purposes of subsection (6) of the principal section (and this Part of this Schedule).

15

All such adjustments shall be made, whether by way of the making of assessments or otherwise, as are required in consequence of the provisions of this Part of this Schedule.

SCHEDULE 8

1

• (1) The Treasury may make regulations providing that an individual who invests under a plan shall be entitled to relief from income tax and capital gains tax in respect of the investments.

• (2) The regulations shall set out the conditions subject to which plans are to operate and the extent to which investors are to be entitled to relief from tax.

• (3) In particular, the regulations may—

• (a) specify the description of individuals who may invest and the kind of investments they may make;

• (b) specify maximum investment limits and minimum periods for which investments are to be held;

• (c) provide that investments are to be held by persons (plan managers) on behalf of investors;

• (d) specify how relief from tax is to be claimed by, and granted to, investors or plan managers on their behalf;

• (e) provide that plans and plan managers must be such as are approved by the Board;

• (f) specify the circumstances in which approval may be granted and withdrawn.

2

• (1) The regulations may include provision that in prescribed circumstances—

• (a) an investor under a plan shall cease to be, and be treated as not having been, entitled to relief from tax in respect of the investments, and

• (b) he or the plan manager concerned (depending on the terms of the regulations) shall account to the Board for tax from which relief has already been given on the basis that the investor was so entitled.

• (2) The regulations may include provision that an investor under a plan or the plan manager concerned (depending on the terms of the regulations) shall account to the Board for tax from which relief has been given in circumstances such that the investor was not entitled to it.

• (3) The regulations may include provision adapting, or modifying the effect of, any enactment relating to income tax or to capital gains tax in order to—

• (a) secure that investors under plans are entitled to relief from tax in respect of investments;

• (b) secure that investors under plans cease to be, and are treated as not having been, so entitled;

• (c) secure that investors under plans or plan managers account for tax as mentioned in sub-paragraph (1) or (2) above.

• (4) The regulations may provide that a person who is, or has at any time been, either an investor under a plan or a plan manager—

• (a) shall comply with any notice which is served on him by the Board and which requires him within a prescribed period to make available for the Board's inspection documents (of a prescribed kind) relating to a plan or to investments which are or have been held under it;

• (b) shall, within a prescribed period of being required to do so by the Board, furnish to the Board information (of a prescribed kind) about a plan or about investments which are or have been held under it.

• (5) The regulations may include provision generally for the purpose of bringing plans into existence, and generally for the purpose of the administration of plans and the administration of income tax, corporation tax and capital gains tax in relation to them.

• (6) The words "Regulations under Schedule 8 to the Finance Act 1986" 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 furnish information etc.).

3

• (1) The power to make regulations under this Schedule shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of the House of Commons.

• (2) In this Schedule "prescribed" means prescribed by the regulations.

SCHEDULE 9

Part I

1

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

Relevant period

2

In paragraph 2(7)(b), after "5" there shall be inserted "5A, 5B, 5C".

Research and development companies

3

In paragraph 2A—

• (a) in sub-paragraph (1)(a), for the words from "from" to the end there shall be substituted the words "to be carried on by the company or by any subsidiary of the company and from which it is intended that a qualifying trade (to be so carried on) will be derived; or";

• (b) in sub-paragraph (2) for the words from "at the time" to "by it; or" there shall be substituted the words "by the company or by any subsidiary of the company on the date on which the shares are issued, or begins so to be carried on immediately thereafter, and from which it is intended that a qualifying trade (to be so carried on) will be derived; or";

• (c) in sub-paragraph (3), after the word "company" there shall be inserted the words "or (as the case may be) subsidiary"; and

• (d) in sub-paragraph (4), the words "and the words 'by the company' shall be omitted" shall be added at the end.

4

• (1) After paragraph 2A there shall be inserted the following paragraph—

(2B) (1) Where eligible shares in a company are issued for the purpose of enabling the company to raise money for oil exploration— (a) to be carried on by the company, or by any subsidiary of the company; and (b) from which it is intended that a qualifying trade (to be so carried on) will be derived; paragraph 2 above shall apply in relation to the company with the modifications set out in this paragraph. (2) For paragraph (b) of sub-paragraph (1) there shall be substituted the following paragraphs— (b) those shares are issued to him for the purpose of raising money for oil exploration which— (i) is being carried on by the company, or by any subsidiary of the company, on the date on which the shares are issued; or (ii) begins so to be carried on immediately thereafter; and from which it is intended that a qualifying trade (to be so carried on) will be derived; (c) throughout the period of three years beginning with that date, the company, or any subsidiary of the company, holds an exploration licence which was granted to it, or to another such subsidiary; (d) the exploration is carried out solely within the area to which the licence applies; and (e) on the date on which the shares are issued, neither the company nor any subsidiary of the company holds an appraisal licence or a development licence relating to that area or any part of that area. (3) After sub-paragraph (1) there shall be inserted the following sub-paragraph— (1A) Where, at any time after the issue of the shares, but before the end of the period mentioned in paragraph (c) of sub-paragraph (2) above, the company, or any subsidiary of the company, comes to hold an appraisal licence or development licence which relates to the area, or any part of the area, to which the exploration licence relates, the exploration licence and that other licence shall be treated for the purposes of that paragraph as a single exploration licence. (4) For sub-paragraph (4) there shall be substituted the following sub-paragraph— (4) The relief shall be given on a claim and shall not be allowed unless and until the company has carried on the exploration for four months (5) In sub-paragraph (5), for the word 'trade' there shall be substituted the word 'exploration'. (6) In sub-paragraph (7)(b), for the words from 'either' to the end there shall be substituted the words 'three years after that date'. (7) A trade which consists to any substantial extent of oil extraction activities shall, if it would be a qualifying trade were it not for paragraph 6(2)(d) below, be treated as a qualifying trade for the purposes of this paragraph (including those of paragraph 2(1)(b) as modified).

• (2) This paragraph has effect in relation to shares issued at any time after the passing of" this Act.

Individuals qualifying for relief

5

• (1) In paragraph 4, the following sub-paragraph shall be added at the end—

(5) An individual who is at any time performing duties which are treated by virtue of section 184(3)(a) of the Taxes Act (Crown employees serving overseas) as performed in the United Kingdom shall be treated, for the purposes of this paragraph, as resident and ordinarily resident in the United Kingdom at that time.

• (2) This paragraph shall have effect in relation to shares issued on or after 6th April 1986.

Qualifying companies

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• (1) Paragraph 5 shall be amended as follows.

• (2) In sub-paragraph (1) the words "Subject to paragraph 5A below" shall be inserted at the beginning.

• (3) After sub-paragraph (3) there shall be inserted the following subparagraph—

(3A) Where a company has one or more qualifying subsidiaries, it shall not be a qualifying company if the qualifying trade or trades carried on by the company and its subsidiaries, taken as a whole, are not carried out wholly or mainly in the United Kingdom

.

• (4) Sub-paragraphs (8) to (11) shall cease to have effect.

7

The following paragraphs shall be inserted after paragraph 5—

(5A) (1) Subject to paragraph 5C below, a company is not a qualifying company if at any time during the relevant period— (a) the value of the interests in land held by the company at that time; or (b) where lower, the value of the interests in land which were held by the company immediately after the issue of the shares (adjusted in accordance with paragraph 5B below); is greater than half the value of the company's assets as a whole. (2) For the purposes of this paragraph, the value of the interests in land held by a company on any date shall be arrived at by first aggregating the market value on that date of each of those interests and then deducting— (a) the amount of any debts of the company which are secured on any of those interests (including any debt secured by a floating charge on property which comprises any of those interests); (b) the amount of any unsecured debts of the company which do not fall due for payment before the expiry of the period of twelve months beginning with that date; and (c) the amount paid up in respect of those shares of the company (if any) which carry a present or future preferential right to the company's assets on its winding up. (3) For the purposes of this paragraph, the value of a company's assets as a whole shall be arrived at by first aggregating the market value of each of those assets and then deducting the amount of the debts and liabilities of the company. (4) For the purposes of sub-paragraph (3) above, the amount paid up in respect of those shares of a company (if any) which carry a present or future preferential right to the company's assets on its winding up shall be treated as a debt of the company, but otherwise a company's share capital, share premium account and reserves shall not be treated for those purposes as debts or liabilities of the company. (5) In this paragraph "interest in land" means any estate or interest in land, any right in or over land or affecting the use or disposition of land, and any right to obtain such an estate, interest or right from another which is conditional on that other's ability to grant the estate, interest or right in question, except that it does not include— (a) the interest of a creditor (other than a creditor in respect of a rentcharge) whose debt is secured by a mortgage, an agreement for a mortgage or a charge of any kind over land; or (b) in Scotland, the interest of a creditor in a charge or security of any kind over land. (6) In arriving at the value of any interest in land for the purposes of this paragraph— (a) it shall be assumed that there is no source of mineral deposits in the land of a kind which it would be practicable to exploit by extracting them from underground otherwise than by means of opencast mining or quarrying; and (b) any borehole on the land shall be disregarded if it was made in the course of oil exploration. (7) Where a company is a member of a partnership which holds any interest in land— (a) that interest shall, for the purposes of this paragraph and paragraphs 5B and 5C below, be treated as an interest in land held by the company; but (b) its value at any time shall, for those purposes, be taken to be such fraction of its value (apart from this subparagraph) as is equal to the fraction of the assets of the partnership to which the company would be entitled if the partnership were dissolved at that time. (8) Where a qualifying company has one or more subsidiaries, the company and its subsidiaries ("the group") shall be treated as a single company for the purposes of this paragraph and paragraphs 5B and 5C below; but any debt owed by, or liability of, one member of the group to another shall be disregarded for those purposes. (9) The Treasury may by order made by statutory instrument amend sub-paragraph (1) above by substituting a different fraction for the fraction for the time being specified there; and any such order shall be subject to annulment in pursuance of a resolution of the Commons House of Parliament. (10) Where a company has ceased to be a qualifying company in consequence of the operation of this paragraph, section 62(6) of Chapter II shall apply as if the relief was withdrawn in consequence of an event which occurred at the time when the company so ceased to be a qualifying company. (5B) (1) For the purposes of paragraph 5A(1)(b) above, the value of the interests in land held by a company immediately after the issue of the shares in question ("the original interests") shall be adjusted by— (a) adding— (i) the cost of any interests in land subsequently acquired by the company ("the later interests"); and (ii) any expenditure (whenever payable) incurred by the company wholly and exclusively in enhancing the value of any of the original or later interests; (b) deducting any consideration for the disposal by the company of any of the original or later interests or for the grant by the company of any interest in land out of any of those interests; and (c) deducting any consideration otherwise derived by the company from its ownership of any of the original or later interests. (2) Any sum which is received by a company by way of rent, or which is attributable to the use of any premises by the company, shall be disregarded for the purposes of sub-paragraph (1)(c) above. (3) For the purposes of this paragraph— (a) the cost of an interest in land acquired by a company shall be taken to be the amount or value of the consideration given by the company, or on its behalf, wholly and exclusively for the acquisition of the interest; (b) consideration shall be brought into account without any discount for the postponement of the right to receive any part of it; and (c) the grant of an interest in land out of any of the original interests shall be treated as a disposal of the original interest in question. (4) Where— (a) the interest of a company as lessee under a lease ("the lease") falls to be valued at any time for the purposes of paragraph 5A above or the cost of acquiring that interest falls to be calculated for the purposes of this paragraph; and (b) the aggregate amount of the rent payable by the lessee under the lease before the end of the relevant period exceeds that which would be so payable under a lease of the premises at a full market rent (but otherwise on the same terms and conditions as the lease); the value of the company's interest at that time shall be calculated on the assumption that the aggregate amount payable as mentioned in paragraph (b) above is a nominal amount and, where the interest was acquired after the issue of the shares in question, it shall be assumed that the company paid the appropriate premium when acquiring the interest. (5) In determining, for the purposes of this paragraph, the consideration for the disposal or acquisition of an interest in land, no account shall be taken in the first instance of any contingent liability assumed by the company or by any other person. (6) If it is subsequently shown to the satisfaction of the Board that a contingent liability which was not taken into account in determining the consideration for a disposal or acquisition has become enforceable and is being or has been enforced, such adjustment, whether by way of a further assessment or the discharge or repayment of tax or otherwise, shall be made as is required in consequence. (7) Where the relief obtainable under sub-paragraph (6) above requires a discharge or repayment of tax, it shall be given on a claim to the Board and such a claim may be made at any time. (5C) (1) Where a company raises any amount through the issue of eligible shares, paragraph 5A above— (a) shall not have effect to deny relief in relation to those shares if the aggregate of that amount and of all other amounts (if any) so raised within the period of twelve months ending with the date of that issue does not exceed £50,000; and (b) where that aggregate exceeds £50,000, shall have effect to deny relief only in relation to the excess. (2) Where— (a) at any time within the relevant period, the company in question or any of its subsidiaries carries on any trade or part of a trade in partnership, or as a party to a joint venture, with one or more other persons; and (b) that other person, or at least one of those other persons, is a company; the reference to £50,000, both in sub-paragraph (1)(a) and (1)(b) above, shall have effect as if it were a reference to— $$£50,0001+A$ "A" being the total number of companies (apart from the company in question or any of its subsidiaries) which are members of any such partnership or parties to any such joint venture during the relevant period.$ (3) Where paragraph 5A, as read with this paragraph, requires a restriction to be placed on the relief given on claims in respect of shares issued to two or more individuals, the available relief shall be divided between them in proportion to the amounts which have been respectively subscribed by them for the shares to which their claims relate and which would, apart from the restriction, be eligible for the relief. (4) A claimant who is dissatisfied with the manner in which the available relief is divided under this paragraph between him and any other claimant or claimants may apply to the appropriate Commissioners who shall, after giving the other claimant or claimants an opportunity to appear and be heard or to make representations in writing, determine the question for all the claimants in the same way as an appeal. (5) In this paragraph "the appropriate Commissioners" means— (a) in a case where the same body of General Commissioners has jurisdiction with respect to all the claimants, those Commissioners, unless all the claimants agree that the question should be determined by the Special Commissioners; (b) in a case where different bodies of General Commissioners have jurisdiction with respect to the claimants, such of those bodies as the Board may direct, unless all the claimants agree that the question should be determined by the Special Commissioners; and (c) in any other case, the Special Commissioners. (6) In calculating the aggregate mentioned in sub-paragraph (1)(a) above in respect of any period of twelve months which begins on or before 18th March 1986, any amount raised by the issue of eligible shares on or before that date shall be disregarded.

Qualifying trades

8

• (1) Paragraph 6 shall be amended as follows.

• (2) For sub-paragraph (2) there shall be substituted the following sub-paragraph—

(2) The trade must not at any time in the relevant period consist of one or more of the following activities if that activity amounts, or those activities when taken together amount, to a substantial part of the trade— (a) dealing in commodities, shares, securities, land or futures; (b) dealing in goods otherwise than in the course of an ordinary trade of wholesale or retail distribution; (c) banking, insurance, money-lending, debt-factoring, hire-purchase financing or other financial activities; (d) oil extraction activities; (e) leasing (including letting ships on charter or other assets on hire) or receiving royalties or licence fees; (f) providing legal or accountancy services; or (g) providing services or facilities for any trade carried on by another person which consists to any substantial extent of activities within any of paragraphs (a) to (f) above and in which a controlling interest is held by a person who also has a controlling interest in the trade carried on by the company.

• (3) For sub-paragraph (2B) there shall be substituted the following sub-paragraphs—

(2B) A trade shall not be treated as failing to comply with this paragraph by reason only of its consisting of letting ships, other than oil rigs or pleasure craft, on charter if— (a) every ship let on charter by the company carrying on the trade is beneficially owned by the company; (b) every ship beneficially owned by the company is registered in the United Kingdom; (c) throughout the relevant period the company is solely responsible for arranging the marketing of the services of its ships; and (d) the conditions mentioned in sub-paragraph (2C) below are satisfied in relation to every letting on charter by the company, but where any of the requirements mentioned in paragraphs (a) to (d) above are not satisfied in relation to any lettings of such ships, the trade shall not thereby be treated as failing to comply with this paragraph if those lettings and any other activity of a kind falling within paragraph 6(2) above do not, when taken together, amount to a substantial part of the trade. (2C) The conditions are that— (a) the letting is for a period not exceeding twelve months and no provision is made at any time (whether in the lease or otherwise) for extending it beyond that period otherwise than at the option of the lessee; (b) during the period of the letting there is no provision in force (whether made in the lease or otherwise) for the grant of a new letting to end, otherwise than at the option of the lessee, more than twelve months after that provision is made; (c) the letting is by way of a bargain made at arm's length between the company and a person who is not connected with it; (d) under the terms of the charter the company is responsible as principal— (i) for taking, throughout the period of the charter, management decisions in relation to the ship, other than those of a kind generally regarded by persons engaged in trade of the kind in question as matters of husbandry; and (ii) for defraying all expenses in connection with the ship throughout that period, or substantially all such expenses, other than those directly incidental to a particular voyage or to the employment of the ship during that period; and (e) no arrangements exist by virtue of which a person other than the company may be appointed to be responsible for the matters mentioned in paragraph (d) above on behalf of the company; but this sub-paragraph shall have effect, in relation to any letting between the company in question and its subsidiary, or between it and another company of which it is a subsidiary or between it and a company which is a subsidiary of the same company of which it is a subsidiary, as if paragraph (c) were omitted.

• (4) For sub-paragraph (4) there shall be substituted the following sub-paragraphs—