Finance Act 1987

• (a) the apportionment specified in the apportionment notice shall, as respects the two final periods, have effect as if it were the apportionment resulting from section 8(2) of the principal Act; and

• (b) all such amendments of assessments to tax and determinations shall be made as may be necessary in consequence of paragraph (a) above.

• (6) If the Board are not satisfied that an apportionment notice complies with subsections (2) to (4) above, they shall give notice to the responsible person rejecting the apportionment notice and, where the Board give such a notice, the responsible person may, by notice in writing given to the Board within thirty days after the date of the notice of rejection, appeal ... against the notice.

• (7) Where notice of appeal is given under subsection (6) abvove—

• (a) if, at any time after the giving of the notice and before the determination of the appeal by the tribunal, the Board and the appellant agree that the apportionment notice should be accepted or withdrawn or varied, the same consequences shall ensue as if the tribunal had determined the appeal to that effect;

• (b) if the appeal is notified to the tribunal and it appears to the tribunal that the apportionment notice should be accepted, with or without modifications, the tribunal shall allow the appeal and, where appropriate, make such modifications of the apportionment specified in the notice as the tribunal thinks fit; and

• (c) where the appeal is allowed, subsection (5) above shall apply as if the apportionment notice (subject to any modifications made by the tribunal) had been accepted by the Board.

• (8) Paragraphs 14(2), (8) and (11) and 14A to 14I of Schedule 2 to the principal Act shall apply in relation to an appeal under subsection (6) as they apply in relation to an appeal against an assessment or determination made under that Act subject to the following modifications—

• (a) any reference in those paragraphs to a participator is to be construed as a reference to the responsible person by whom notice of appeal is given;

• (b) any reference to an agreement under paragraph 14(9) shall be construed as a reference to an agreement under subsection (7)(a) above;

• (c) any other modifications that are necessary.

• (9) This section applies where the final allocation period ends on or after 30th June 1987.

Variation of decisions on claims for allowable expenditure

67

In Schedule 7 to the principal Act (claim for allowance of certain exploration expenditure etc.) at the end of the Table set out in paragraph 1(3) (which applies the provisions of Schedule 5 specified in the first column of the Table with the modifications specified in the second column) there shall be added—

9	In sub-paragraph (2) omit paragraphs (b) and (c), in sub-paragraph (8) for the reference to all or any of the participators substitute a reference to the participator by whom the claim is made and in sub-paragraph (11) for “after 15th March 1983” substitute “ on or after 17th March 1987 ”.

Part VI — Miscellaneous and Supplementary

Abolition of enactments relating to exchange control

68

• (1) The Exchange Control Act 1947 shall cease to have effect.

• (2) Nothing in subsection (1) above affects the power of the Treasury to issue a certificate under subsection (2) of section 18 of that Act (including that subsection as applied by section 28(3) or section 29(3) of that Act) with respect to acts done before 13th December 1979.

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

• (4) Subsections (1) and (2) above extend to the Channel Islands and the Isle of Man.

Regulation of financial dealings

69

In section 2 of the Banking and Financial Dealings Act 1971 (power of Treasury to suspend financial dealings)—

• (a) at the end of paragraph (c) of subsection (1) (power to suspend dealings in gold) there shall be added “ or, according as may be specified in the order, gold of such kind as may be so specified ”; and

• (b) in subsection (6) for the definition beginning “foreign currency” there shall be substituted—

“foreign currency” means any currency other than sterling and any units of account defined by reference to more than one currency (whether or not including sterling); and “gold” includes gold coin, gold bullion and gold wafers.

Arrangements specified in Orders in Council relating to double taxation relief etc.

70

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

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

Pre-consolidation amendments

71

Short title, interpretation, construction and repeals

72

• (1) This Act may be cited as the Finance Act 1987.

• (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, except section 56 and Schedule 7, shall be construed as one with the Stamp Act 1891.

• (5) In Part IV of this Act “the 1984 Act” means the Inheritance Tax Act 1984.

• (6) Part V of this Act shall be construed as one with Part I of the Oil Taxation Act 1975 and in that Part “the principal Act” means that Act.

• (7) The enactments specified in Schedule 16 to this Act (which include enactments which are spent or otherwise unnecessary) 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 — Tables Substituted in Part II of Schedule 4 to the Acts of 1971 and 1972

Part II — Recovery Vehicles

Interpretation

1

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

2

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The charge of duty

3

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

Recovery vehicles not chargeable as goods vehicles

4

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

Exclusion of recovery vehicles from trade licences

5

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

6

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

Part III — Miscellaneous Amendments

Introductory

7

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

Additional liability for evasion of duty

8

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

9

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

10

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

11

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

12

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13

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

Offences relating to trade licences

14

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

15

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

Regulations concerning transfer etc. of vehicles

16

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

17

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

Increase of certain penalties for offences under regulations

18

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

19

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

Dishonoured cheques

20

In subsection (3) of section 102 of the Customs and Excise Management Act 1979 (penalty for failure to deliver up excise licence following dishonour of cheque) after paragraph (a) there shall be inserted the following paragraph—

(aa) where the licence is a licence under the Vehicles (Excise) Act 1971, a penalty of whichever is the greater of— (i) level 3 on the standard scale, or (ii) an amount equal to five times the annual rate of duty that was payable on the grant of the licence or would have been so payable if it had been taken out for a period of twelve months.

21

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

SCHEDULE 2

Supplies received from abroad

1

Section 7 of the principal Act (reverse charge on supplies received from abroad) shall be amended as follows—

• (a) in paragraph (b) of subsection (1), for the words “taxable person” there shall be substitiuted “person (in this section referred to as “the recipient”)”;

• (b) in subsection (1), in the words following paragraph (b) for the words “as if the taxable person” there shall be substituted “as if the recipient”;

• (c) in subsections (3) and (4) for the words “taxable person” there shall be substituted “recipient”; and

• (d) in subsection (3) for the words “the allowance” there shall be substituted “any allowance”.

Repayment of tax on importation to those in business overseas

2

Transfers of going concerns

3

In section 33 of the principal Act (transfers of going concerns), after subsection (1) there shall be inserted—

(1A) Where the transferee is liable to be registered by virtue of paragraph 1(1)(b) of Schedule 1 to this Act at the time the business is transferred, paragraph 4(2) of that Schedule shall not apply but the Commissioners shall register him with effect from that time.

.

Appeals

4

In section 40(1) of the principal Act (appeals) for paragraph (d) there shall be substituted—

(d) the proportion of input tax allowable under section 15 above

.

SCHEDULES 3–6. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part I — The Taxable Maximum

1

• (1) For the purposes of subsections (3) and (4) of the principal section, the taxable maximum in respect of a week shall be determined in accordance with paragraphs 2 to 4 below and the taxable maximum in respect of part of a week shall be equal to one-sixth of the taxable maximum in respect of a week multiplied by the number of days in the part.

• (2) In this Part of this Schedule—

• (a) "married couple" and "unmarried couple" have the same meaning as in Part II of the Social Security Act 1986; and

• (b) "the principal section" means section 29 of this Act.

2

Where the income support is paid to one of a married or unmarried couple in a case not falling within subsection (2)(b) of the principal section, the taxable maximum in respect of a week shall be equal to the aggregate of—

• (a) the weekly rate specified for the week in question in relation to unemployment benefit in paragraph 1 of Part I of Schedule 4 to the Social Security Act 1975; and

• (b) the increase for an adult dependant specified for that week in paragraph 1(a) of Part IV of that Schedule.

3

Where the income support is paid to one of a married or unmarried couple in a case falling within subsection (2)(b) of the principal section, the taxable maximum in respect of a week shall—

• (a) if the applicable amount (within the meaning of Part II of the Social Security Act 1986) consists only of an amount in respect of them, be equal to one half of that amount; and

• (b) if the applicable amount includes other amounts, be equal to one half of the portion of it which is included in respect of them.

4

Where the income support is paid to a person who is not one of a married or unmarried couple, the taxable maximum in respect of a week shall be equal to the weekly rate referred to in paragraph 2(a) above.

Part II — Consequential Amendments

The Income and Corporation Taxes Act 1970

5

In subsection (2) of section 530 of the Taxes Act (meaning of "earned income" in the Income Tax Acts) in paragraph (c) for the words "or section 27 of the Finance Act 1981" there shall be substituted "or section 29 of the Finance Act 1987".

The Finance Act 1981

6

In section 28(1) of the Finance Act 1981 (notification of amount of benefit which is taxable) for the words "under section 27 above" there shall be substituted "in respect of any unemployment benefit or income support".

7

In section 29 of the Finance Act 1981 (pay as you earn repayments) for paragraph (b) there shall be substituted the following—

(b) he has claimed a payment of income support under the Social Security Act 1986 or the Social Security (Northern Ireland) Order 1986 in respect of a period including that time and his right to that income support is subject to the condition specified in section 20(3)(d)(i) of that Act or, in Northern Ireland, Article 21(3)(d)(i) of that Order (availability for employment);

SCHEDULE 4

Part I — Amendments of Schedule 10 to the Finance Act 1980 and Schedule 10 to the Finance Act 1984

1

• (1) In Schedule 10 to the Finance Act 1980 (savings-related share option schemes) after paragraph 10 there shall be inserted the following paragraph—

(10A) (1) The scheme may also provide that if any company (in this paragraph referred to as "the acquiring company")— (a) obtains control of a company whose shares are scheme shares as a result of making a general offer falling within sub-paragraph (i) or sub-paragraph (ii) of paragraph 10(1)(a) above, or (b) obtains control of a company whose shares are scheme shares in pursuance of a compromise or arrangement sanctioned by the court under section 425 of the Companies Act 1985 or Article 418 of the Companies (Northern Ireland) Order 1986, or (c) becomes bound or entitled to acquire shares in a company whose shares are scheme shares under sections 428 to 430 of the said Act of 1985 or Articles 421 to 423 of the said Order of 1986, any participant in the scheme may at any time within the appropriate period, by agreement with the acquiring company, transfer to the acquiring company his rights under the scheme (in this paragraph referred to as "the old rights") in consideration of the grant to him of rights (in this paragraph referred to as "the new rights") which are equivalent to the old rights but relate to shares in a different company (whether the acquiring company itself or some other company falling within paragraph (b) or paragraph (c) of paragraph 15 below). (2) In sub-paragraph (1) above "the appropriate period" means— (a) in a case falling within paragraph (a), the period of six months beginning with/the time when the person making the offer has obtained control of the company and any condition subject to which the offer is made is satisfied, (b) in a case falling within paragraph (b), the period of six months beginning with the time when the court sanctions the compromise or arrangement, and (c) in a case falling within paragraph (c), the period during which the acquiring company remains bound or entitled as mentioned in that paragraph. (3) The new rights shall not be regarded for the purposes of this paragraph as equivalent to the old rights unless— (a) the shares to which they relate satisfy the conditions specified, in relation to scheme shares, in paragraphs 15 to 19 below; and (b) the new rights will be exercisable in the same manner as the old rights and subject to the provisions of the scheme as it had effect immediately before the exchange; and (c) the total market value, immediately before the exchange, of the shares which were subject to the participant's old rights is equal to the total market value, immediately after the exchange, of the shares in respect of which the new rights are granted to the participant; and (d) the total amount payable by the participant for the acquisition of shares in pursuance of the new rights is equal to the total amount that would have been payable for the acquisition of shares in pursuance of the old rights. (4) Where any new rights are granted pursuant to a provision included in a scheme by virtue of this paragraph they shall be regarded— (a) for the purposes of section 47 of this Act and this Schedule, and (b) for the purposes of the subsequent application (by virtue of a condition complying with sub-paragraph (3)(b) above) of the provisions of the scheme, as having been granted at the time when the corresponding old rights were granted.

• (2) In paragraph 11 of the said Schedule 10 (rights not to be capable of being transferred) after the words "paragraph 7" there shall be inserted "or paragraph 10A".

2

• (1) In Schedule 10 of the Finance Act 1984 (approved share option schemes) after paragraph 4 there shall be inserted the following paragraph—

(4A) (1) The scheme may provide that if any company (in this paragraph referred to as "the acquiring company")— (a) obtains control of a company whose shares are scheme shares as a result of making— (i) a general offer to acquire the whole of the issued share capital of the company which is made on a condition such that if it is satisfied the person making the offer will have control of the company, or (ii) a general offer to acquire all the shares in the company which are of the same class as the scheme shares, or (b) obtains control of a company whose shares are scheme shares in pursuance of a compromise or arrangement sanctioned by the court under section 425 of the Companies Act 1985 or Article 418 of the Companies (Northern Ireland) Order 1986, or (c) becomes bound or entitled to acquire shares in a company whose shares are scheme shares under sections 428 to 430 of the said Act of 1985 or Articles 421 to 423 of the said Order of 1986, any participant in the scheme may at any time within the appropriate period, by agreement with the acquiring company, transfer to the acquiring company his rights under the scheme (in this paragraph referred to as "the old rights") in consideration of the grant to him of rights (in this paragraph referred to as "the new rights") which are equivalent to the old rights but relate to shares in a different company (whether the acquiring company itself or some other company falling within paragraph (b) or paragraph (c) of paragraph 7 below). (2) In sub-paragraph (1) above "the appropriate period" means— (a) in a case falling within paragraph (a), the period of six months beginning with the time when the person making the offer has obtained control of the company and any condition subject to which the offer is made is satisfied, (b) in a case falling within paragraph (b), the period of six months beginning with the time when the court sanctions the compromise or arrangement, and (c) in a case falling within paragraph (c), the period during which the acquiring company remains bound or entitled as mentioned in that paragraph. (3) The new rights shall not be regarded for the purposes of this paragraph as equivalent to the old rights unless— (a) the shares to which they relate satisfy the conditions specified, in relation to scheme shares, in paragraphs 7 to 11 below; and (b) the new rights will be exercisable in the same manner as the old rights and subject to the provisions of the scheme as it had effect immediately before the exchange; and (c) the total market value, immediately before the exchange, of the shares which were subject to the participant's old rights is equal to the total market value, immediately after the exchange, of the shares in respect of which the new rights are granted to the participant; and (d) the total amount payable by the participant for the acquisition of shares in pursuance of the new rights is equal to the total amount that would have been payable for the acquisition of shares in pursuance of the old rights. (4) Where any new rights are granted pursuant to a provision included in a scheme by virtue of this paragraph they shall be regarded— (a) for the purposes of section 38 of this Act and this Schedule, and (b) for the purposes of the subsequent application (by virtue of a condition complying with sub-paragraph (3)(b) above) of the provisions of the scheme, as having been granted at the time when the corresponding old rights were granted.

• (2) In paragraph 12 of the said Schedule 10 (transfer of rights) after the words "any of them" there shall be inserted "(except pursuant to a provision included in the scheme by virtue of paragraph 4A above)".

Part II — Transitional Provisions

3

• (1) Where an existing scheme is altered before 1st August 1989 so as to include such a provision as is mentioned in paragraph 10A of Schedule 10 to the Finance Act 1980 or, as the case may be, paragraph 4A of Schedule 10 to the Finance Act 1984 (in this paragraph referred to as "an exchange provision"), the scheme as altered may by virtue of this paragraph apply that provision to rights obtained under the scheme before the date on which the alteration takes effect.

• (2) If an exchange provision is applied as mentioned in sub-paragraph (1) above in a case where, on or after 17th March 1987 but before the date on which the alteration takes effect, an event has occurred by reason of which a person holding rights under the scheme would be able to take advantage of the exchange provision—

• (a) the scheme may permit a person who held rights under the scheme immediately before that event to take advantage of the exchange provision, and

• (b) in a case where rights then held would otherwise, by reason of the event, have ceased to be exercisable, the scheme may provide that the exchange provision shall apply as if the rights were still exercisable.

• (3) The application of an exchange provision as mentioned in sub-paragraph (1) or sub-paragraph (2) above shall not itself be regarded for the purposes of Schedule 10 to the Finance Act 1980 or, as the case may be, Schedule 10 to the Finance Act 1984 as the acquisition of a right.

• (4) In sub-paragraph (1) above "an existing scheme" means a scheme approved under Schedule 10 to the Finance Act 1980 or Schedule 10 to the Finance Act 1984 before 1st August 1987.

• (5) This paragraph has effect subject to paragraph 3(2) of Schedule 10 to the said Act of 1980 or, as the case may be, paragraph 2(2) of Schedule 10 to the said Act of 1984 (which require the approval of the Board for any alteration in a scheme).

Part III — Consequential Provisions Relating to Capital Gains Tax

4

In section 47 of the Finance Act 1980 (savings-related share option schemes) after subsection (2) there shall be inserted the following subsection—

(2A) Where a right to acquire shares in a body corporate which was obtained as mentioned in subsection (1) above is exchanged for a right to acquire shares in another body corporate in accordance with a provision included in a scheme pursuant to paragraph 10A of Schedule 10 to this Act, the exchange shall not be treated for the purposes of the Capital Gains Tax Act 1979 as involving any disposal of the first-mentioned right or any acquisition of the other right, but for those purposes the other right shall be treated as the same asset acquired as the first-mentioned right was acquired.

5

In section 38 of the Finance Act 1984 (approved share option schemes) after subsection (6) there shall be inserted the following subsection—

(6A) Where a right to acquire shares in a body corporate is exchanged for a right to acquire shares in another body corporate in accordance with a provision included in a scheme pursuant to paragraph 4A of Schedule 10 to this Act, the exchange shall not be treated for the purposes of the Capital Gains Tax Act 1979 as involving any disposal of the first-mentioned right or any acquisition of the other right, but for those purposes the other right shall be treated as the same asset acquired as the first-mentioned right was acquired.

.

Part IV — Material Interest Test

Interests under trusts

6

• (1) This paragraph applies in a case where—

• (a) the individual (in this paragraph referred to as "the beneficiary") was one of the objects of a discretionary trust, and

• (b) the property subject to the trust at any time consisted of or included any shares or obligations of the company.

• (2) If neither the beneficiary nor any relevant associate of his had received any benefit under the discretionary trust before 14th November 1986, then, as respects any time before that date, the trustees of the settlement concerned shall not be regarded, by reason only of the matters referred to in sub-paragraph (1) above, as having been associates (as denned in section 303(3) of the Taxes Act) of the beneficiary.

• (3) If, on or after 14th November 1986,—

• (a) the beneficiary ceases to be eligible to benefit under the discretionary trust by reason of—

• (i) an irrevocable disclaimer or release executed by him under seal, or

• (ii) the irrevocable exercise by the trustees of a power to exclude him from the objects of the trust, and

• (b) immediately after he so ceases, no relevant associate of his is interested in the shares or obligations of the company which are subject to the trust, and

• (c) during the period of twelve months ending with the date when the beneficiary so ceases, neither the beneficiary nor any relevant associate of his received any benefit under the trust,

the beneficiary shall not be regarded, by reason only of the matters referred to in sub-paragraph (1) above, as having been interested in the shares or obligations of the company as mentioned in section 303(3)(c) of the Taxes Act at any time during the period of twelve months referred to in paragraph (c) above.

• (4) In sub-paragraphs (2) and (3) above "relevant associate" has the meaning given to "associate" by section (3) of section 303 of the Taxes Act, but with the omission of paragraph (c) of that subsection.

• (5) Sub-paragraph (3)(a)(i) above, in its application to Scotland, shall be construed as if the words "under seal" were omitted.

Options etc.

7

• (1) For the purposes of paragraph (a) of subsection (6) of section 285 of the Taxes Act (cases in which a person has a material interest in a company) a right to acquire any shares (however arising) shall be taken to be a right to control them.

• (2) Any reference in sub-paragraph (3) below to the shares attributed to an individual is a reference to the shares which, in accordance with section 285(6)(a) of the Taxes Act, fall to be brought into account in his case to determine whether their number exceeds a particular percentage of the company's ordinary share capital.

• (3) In any case where—

• (a) the shares attributed to an individual consist of or include shares which he or any other person has a right to acquire, and

• (b) the circumstances are such that, if that right were to be exercised, the shares acquired would be shares which were previously unissued and which the company is contractually bound to issue in the event of the exercise of the right,

then, in determining at any time prior to the exercise of that right whether the number of shares attributed to the individual exceeds a particular percentage of the ordinary share capital of the company, that ordinary share capital shall be taken to be increased by the number of unissued shares referred to in paragraph (b) above.

• (4) This paragraph has effect as respects any time on or after 6th April 1987.

Shares held by trustees of approved profit sharing schemes

8

In applying section 285(6) of the Taxes Act (cases in which a person has a material interest in a company), as respects any time before or after the passing of this Act, there shall be disregarded—

• (a) the interest of the trustees of a profit sharing scheme approved under Part I of Schedule 9 to the Finance Act 1978 in any shares which are held by them in accordance with the scheme and have not yet been appropriated to an individual; and

• (b) any rights exercisable by those trustees by virtue of that interest.

SCHEDULE 5

Interpretation

1

• (1) In this Schedule—

• "the principal section" means section 35 of this Act; and

• "employer" and "employee" have the same meaning as in the principal section.

• (2) Any reference in this Schedule to an employee being employed by an employer is a reference to the employee holding office or employment under the employer.

Qualifying courses of training

2

Subject to paragraph 3 below, a course is a qualifying course of training if—

• (a) it provides a course of training designed to impart or improve skills or knowledge relevant to, and intended to be used in the course of, gainful employment (including self-employment) of any description; and

• (b) the course is entirely devoted to the teaching or practical application of the skills or knowledge (or to both such teaching and practical application); and

• (c) the duration of the course does not exceed one year; and

• (d) all teaching and practical application forming part of the course takes place within the United Kingdom.

3

A course shall not be regarded as a qualifying course of training in relation to a particular employee unless—

• (a) he attends the course on a full-time or substantially full-time basis; and

• (b) he is employed by the employer full-time throughout the period of two years ending at the time when he begins to undertake the course or, if it is earlier, at the time he ceases to' be employed by him; and

• (c) the opportunity to undertake the course, on similar terms as to payment or reimbursement of relevant expenses, is available either generally to holders or past holders of offices or employment under the employer or to a particular class or classes of such holders or past holders.

Courses undertaken with a view to retraining

4

• (1) An employee shall not be regarded as undertaking a course with a view to retraining unless—

• (a) he begins to undertake the course of training while he is employed by the employer or within the period of one year after he ceases to be so employed; and

• (b) he ceases to be employed by the employer not later than the end of the period of two years beginning at the end of the qualifying course of training.

• (2) An employee shall not be regarded as having undertaken a course with a view to retraining if, any time within the period of two years beginning at the time when he ceased to be employed as mentioned in sub-paragraph (1)(b) above, he is again employed by the employer.

Relevant expenses

5

• (1) Where an employee undertakes a qualifying course of training, the relevant expenses consist of—

• (a) fees for attendance at the course;

• (b) fees for any examination which is taken during or at the conclusion of the course;

• (c) the cost of any books which are essential for a person attending the course; and

• (d) travelling expenses falling within sub-paragraph (2) below.

• (2) The travelling expenses referred to in sub-paragraph (1)(d) above are those which would be deductible under section 189 of the Taxes Act (relief for necessary expenses)—

• (a) on the assumption that attendance at the course is one of the duties of the employee's office or employment; and

• (b) if the employee has in fact ceased to be employed by the employer, on the assumption that he continues to be employed by him.

SCHEDULE 6

Part I — Companies

Interpretation

1

• (1) In this Part of this Schedule an "old company" means a company to which section 244 of the Taxes Act applied in respect of the last accounting period ending before 17th March 1987.

• (2) In relation to an old company—

• (a) "the company's section 244 interval" means the interval after the end of an accounting period of the company which, in accordance with section 244 of the Taxes Act, was the period within which corporation tax assessed for that period was required to be paid; and

• (b) "the period of reduction" means the number of whole days which are comprised in a period equal to one-third of the difference between nine months and the company's section 244 interval.

General rules

2

Subject to paragraph 5 below, with respect to the first accounting period of an old company beginning on or after 17th March 1987, section 243(4) of the Taxes Act (time for payment of corporation tax) shall have effect as if for the reference to nine months there were substituted a reference to a period which is equal to the company's section 244 interval less the period of reduction.

3

Subject to paragraph 5 below, with respect to any accounting period of an old company which begins—

• (a) after the accounting period referred to in paragraph 2 above, but

• (b) before the second anniversary of the beginning of that period,

section 243(4) of the Taxes Act shall have effect as if for the reference to nine months there were substituted a reference to a period equal to the previous payment interval less the period of reduction.

4

In relation to any accounting period of an old company falling within paragraph 3 above, "the previous payment interval" means the interval after the end of the immediately preceding accounting period within which corporation tax for that preceding period is required to be paid by virtue of section 243(4) of the Taxes Act, as modified by this Part of this Schedule.

5

If the accounting period referred to in paragraph 2 above or any accounting period falling within paragraph 3 above is less than twelve months, the paragraph in question shall have effect in relation to that accounting period as if for the reference in that paragraph to the period of reduction there were substituted a reference to the number of whole days comprised in a period which bears to the period of reduction the same proportion as that accounting period bears to twelve months.

Consequential provisions

6

With respect to any accounting period of an old company which falls within paragraph 2 or paragraph 3 above, section 86 of the Taxes Management Act 1970 (interest on overdue tax) shall have effect as if, in paragraph 5(a) of the Table in subsection (4) (the reckonable date in relation to corporation tax), the reference into the nine months mentioned in section 243(4) of the Taxes Act were a reference to the period which, under the preceding provisions of this Part of this Schedule, is substituted for those nine months.

7

In section 88 of the Taxes Management Act 1970 (interest on tax recovered to make good loss due to taxpayer's fault) in paragraph (e) of subsection (5) (the date when corporation tax ought to have been pa(d) for the words from "where section 244(1)" to "the interval" there shall be substituted "in the case of an accounting period in respect of which subsection (4) of section 243 of the principal Act applies as modified by paragraph 2 or paragraph 3 of Schedule 6 to the Finance Act 1987, at the end of the period which, under that paragraph, is substituted for the period of nine months".

8

With respect to any accounting period of an old company which falls within paragraph 2 or paragraph 3 above, section 48 of the Finance (No. 2) Act 1975 (repayment supplement in respect of delayed repayments of certain taxes to companies) shall have effect as if, in subsection (9) in paragraph (a) of the definition of "the material date", the reference to the nine months mentioned in section 243(4) of the Taxes Act were a reference to the period which, under the preceding provisions of this Part of this Schedule, is substituted for those nine months.

Part II — Building Societies

9

In this Part of this Schedule a "1989 accounting period" means an accounting period ending in the year 1989-90.

10

Where, by virtue of section 344(2)(a) of the Taxes Act, corporation tax assessed on a building society in respect of a 1989 accounting period would, apart from this paragraph, be payable by a date which is earlier than the end of the period of two months from the end of that accounting period, the tax shall be payable within that period of two months.

11

If, apart from this paragraph, the date on which, under section 344(2)(b) of the Taxes Act, a building society would be required to make a provisional payment of corporation tax for a 1989 accounting period would fall before the end of the period of two months from the end of that accounting period, that date shall be postponed until the end of that period of two months.

12

With respect to a 1989 accounting period of a building society to which paragraph 10 above applies, in the following enactments—

• (a) in section 86(4) of the Taxes Management Act 1970, paragraph 5(c) in the second column of the Table (the reckonable date for interest on overdue tax); and

• (b) in section 48(9) of the Finance (No. 2) Act 1975, paragraph (c) of the definition of "the material date" (for repayment supplement),

the reference to the time limit imposed by subsection (2)(a) of section 344 of the Taxes Act shall be construed as a reference to the limit imposed by paragraph 10 above.

SCHEDULE 7

1

Part IV of the Finance Act 1986 shall be amended in accordance with the following provisions of this Schedule.

Principal charge

2

• (1) In section 87, after subsection (7) there shall be inserted —

(7A) Where there would be no charge to tax under this section in relation to some of the chargeable securities to which the agreement between A and B relates if separate agreements had been made between them for the transfer of those securities and for the transfer of the remainder, this section shall have effect as if such separate agreements had been made. (7B) This section shall have effect in relation to a person to whom the chargeable securities are transferred by way of security for a loan to B as it has effect in relation to a nominee of B.

.

• (2) This paragraph shall be deemed always to have had effect.

Renounceable letters of allotment, etc.

3

• (1) In section 88(3)(a), after the words “subsection (2)” there shall be inserted the words “the words 'the expiry of the period of two months beginning with' and”.

• (2) This paragraph shall have effect in relation to agreements made on or after 1st August 1987.

Market makers in options

4

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

Clearance services

5

• (1) In section 90, for subsection (5) there shall be substituted —

(5) Section 87 above shall not apply as regards an agreement to transfer securities which the Board are satisfied are held, when the agreement is made, by a person within subsection (6) below. (6) A person is within this subsection if his business is exclusively that of holding shares, stock or other marketable securities — (a) as nominee or agent for a person whose business is or includes the provision of clearance services for the purchase and sale of shares, stock or other marketable securities, and (b) for the purpose of such part of the business mentioned in paragraph (a) above as consists of the provision of such clearance services (in a case where the business does not consist exclusively of that); and in this subsection, 'marketable securities' shall be construed in accordance with section 122(1) of the Stamp Act 1891 .

• (2) This paragraph shall be deemed always to have had effect.

Charities etc.

6

• (1) In section 90, at the end there shall be added —

(7) Section 87 above shall not apply as regards an agreement to transfer securities to — (a) a body of persons established for charitable purposes only, or (b) the trustees of a trust so established, or (c) the Trustees of the National Heritage Memorial Fund, or (d) the Historic Buildings and Monuments Commission for England.

• (2) This paragraph shall be deemed always to have had effect.

Interest on tax repayments

7

• (1) In section 92, after subsection (4) there shall be inserted —

(4A) Interest paid under subsection (2) above shall not constitute income for any tax purposes.

• (2) This paragraph shall be deemed always to have had effect.

SCHEDULE 8

1

In section 10 of the 1984 Act (dispositions not intended to confer gratuitous benefit) in subsection (2) for the words from “shares” to “stock exchange” there shall be substituted “ unquoted shares or unquoted debentures ”.

2

In section 98 of the 1984 Act (effect of alterations of capital, etc.) in subsection (1)—

• (a) in paragraph (a) for the words from “shares” onwards there shall be substituted “ quoted shares or quoted securities ”;

• (b) in paragraph (b) for the words from “shares” onwards there shall be substituted “ unquoted shares in or unquoted debentures of a close company ”; and

• (c) for the words “shares or debentures not so quoted” there shall be substituted “ unquoted shares or unquoted debentures ”.

3

In section 100 of the 1984 Act (alterations of capital where participators are trustees) in subsection (1)(c) for the words from “shares” onwards there shall be substituted “ unquoted shares in or unquoted securities of the close company ”.

4

In section 104 of the 1984 Act (relief for business property) in subsection (1)(a) for the words “or (b)” there shall be substituted “ (b) or (bb) ”.

5

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

6

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

7

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

8

• (1) In section 113A of the 1984 Act (application of relief for business property to transfers made within seven years before death of transferor) in subsection (3) at the beginning of paragraph (b) there shall be inserted the words “ except to the extent that the original property consists of shares or securities to which subsection (3A) below applies ”.

• (2) After subsection (3) of that section there shall be inserted the following subsection—

(3A) This subsection applies to shares or securities— (a) which were quoted at the time of the chargeable transfer referred to in subsection (1) or subsection (2) above; or (b) which fell within paragraph (b) of section 105(1) above in relation to that transfer and were unquoted throughout the period referred to in subsection (3)(a) above.

9

In section 124A of the 1984 Act (application of agricultural relief to transfers within seven years before death of transferor) in subsection (6) for the words following paragraph (b) there shall be substituted “ his period of ownership of the original property shall be treated as including his period of ownership of the shares. ”

10

In section 136 of the 1984 Act (transactions of close companies) in subsection (1)(b) for the words “shares quoted on a recognised stock exchange” there shall be substituted “ quoted shares ” and for the words “shares in or debentures of the company which are not so quoted” there shall be substituted “ unquoted shares in or unquoted debentures of the company ”.

11

In section 140(2) of the 1984 Act (market value for purposes of Chapter IV of Part IV) in paragraph (b) for the words from “shares” to “exchange” there shall be substituted “ unquoted shares ”.

12

• (1) In section 168 of the 1984 Act (unquoted shares and securities) in subsection (1) before the word “securities” where it first occurs, there shall be inserted “ unquoted ”.

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

13

• (1) In section 178 of the 1984 Act (sale of shares etc. from deceased’s estate) in subsection (1), in the definition of “qualifying investments”, for the words from “at the date” to “exchange” there shall be substituted “ are quoted at the date of the death in question ”.

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

• (a) after the words “quotation on a recognised stock exchange” there shall be inserted “ or dealing in the Unlisted Securities Market ”, and

• (b) the words “on a recognised stock exchange”, in the second place where they occur, shall be omitted.

14

In section 180 of the 1984 Act (effect of purchases) in subsection (3) after the word “exchange” there shall be inserted “ or separately dealt in on the Unlisted Securities Market ”.

15

• (1) In section 227 of the 1984 Act (payment by instalments) for subsection (1A) there shall be substituted the following subsection—

(1A) Subsection (1) above does not apply to— (a) tax payable on the value transferred by a potentially exempt transfer which proves to be a chargeable transfer, or (b) additional tax becoming payable on the value transferred by any chargeable transfer by reason of the transferor’s death within seven years of the transfer,except to the extent that the tax is attributable to the value of property which satisfies one of the conditions specified in subsection (1C) below and, in the case of property consisting of unquoted shares or unquoted securities, the further condition specified in section 228(3A) below.

• (2) In subsection (1B) of that section for the words “subsection (1A) above” there shall be substituted “ this section ”.

• (3) After subsection (1B) of that section there shall be inserted the following subsection—

(1C) The conditions referred to in subsection (1A) above are— (a) that the property was owned by the transferee throughout the period beginning with the date of the chargeable transfer and ending with the death of the transferor (or, if earlier, the death of the transferee), or (b) that for the purposes of determining the tax, or additional tax, due by reason of the death of the transferor, the value of the property is reduced in accordance with the provisions of Chapter I or Chapter II of Part V of this Act by virtue of section 113B or section 124B above.

16

• (1) In section 228 of the 1984 Act (shares etc. within section 227) in subsection (1) for the words “not falling under paragraph (a) above and not quoted on a recognised stock exchange”, in each place where they occur, there shall be substituted “ which do not fall under paragraph (a) above and are unquoted ”.

• (2) After subsection (3) of that section there shall be inserted the following subsection—

(3A) The further condition referred to in section 227(1A) above is that the shares or securities remained unquoted throughout the period beginning with the date of the chargeable transfer and ending with the death of the transferor (or if earlier, the death of the transferee).

17

In section 272 of the 1984 Act (general interpretation) after the definition of “purchaser” there shall be inserted—

“quoted”, in relation to any shares or securities, means quoted on a recognised stock exchange or dealt in on the Unlisted Securities Market and “unquoted”, in relation to any shares or securities, means neither so quoted nor so dealt in

.

18

• (1) In Schedule 20 to the Finance Act 1986 (gifts with reservation) paragraph 8 (agricultural and business property) shall be amended as follows.

• (2) In sub-paragraph (1) for the word “Where” there shall be substituted “ This paragraph applies where ” and the words from “then” onwards shall be omitted.

• (3) After sub-paragraph (1) there shall be inserted the following sub-paragraph—

(1A) Where this paragraph applies— (a) any question whether, on the material transfer of value, any shares or securities fall within paragraph (b) or paragraph (bb) of section 105(1) of the 1984 Act (which specify shares and securities qualifying for 50 per cent. relief) shall be determined, subject to the following provisions of this paragraph, as if the shares or securities were owned by the donor and had been owned by him since the disposal by way of gift; and (b) subject to paragraph (a) above, any question whether, on the material transfer of value, relief is available by virtue of Chapter I or Chapter II of Part V of the 1984 Act and, if relief is available by virtue of Chapter II, what is the appropriate percentage for that relief, shall be determined, subject to the following provisions of this paragraph, as if, so far as it is attributable to the property comprised in the gift, that transfer were a transfer of value by the donee.

• (4) In sub-paragraph (2) for the words “sub-paragraph (1)” there shall be substituted “ sub-paragraph (1A)(b) ”.

• (5) In sub-paragraph (3)—

• (a) for the words “that sub-paragraph shall not apply” there shall be substituted “ relief shall not be available by virtue of Chapter II of Part V of the 1984 Act on the material transfer of value ”; and

• (b) for the words “by virtue of sub-paragraph (1) above” there shall be substituted “ by virtue of sub-paragraph (1A)(b) above ”.

SCHEDULE 9

1

The following section shall be inserted after section 57 of the Inheritance Tax Act 1984—

(57A) (1) Subject to the following provisions, subsection (2) below applies where— (a) a person dies who immediately before his death was beneficially entitled to an interest in possession in property comprised in a settlement, and (b) within two years after his death the property becomes held on trusts (whether of that or another settlement) by virtue of which a direction under paragraph 1 of Schedule 4 to this Act is given in respect of the property. (2) Where this subsection applies, this Act shall have effect as if the property had on the death of the deceased become subject to the trusts referred to in subsection (1)(b) above; and accordingly no disposition or other event occurring between the date of the death and the date on which the property becomes subject to those trusts shall, so far as it relates to the property, be a transfer of value or otherwise constitute an occasion for a charge to tax. (3) Where property becomes held on trusts of the kind specified in paragraph (b) of subsection (1) above as the result of proceedings before a court and could not have become so held without such proceedings, that paragraph shall have effect as if it referred to three years instead of two. (4) Subsection (2) above shall not apply if— (a) the disposition by which the property becomes held on the trusts referred to in subsection (1)(b) above depends on a condition or is defeasible; or (b) the property which becomes held on those trusts is itself an interest in settled property; or (c) the trustees who hold the property on those trusts have, for a consideration in money or money’s worth, acquired an interest under a settlement in which the property was comprised immediately before the death of the person referred to in subsection (1)(a) above or at any time thereafter; or (d) the property which becomes held on those trusts does so for a consideration in money or money’s worth, or is acquired by the trustees for such a consideration, or has at any time since the death of the person referred to in subsection (1)(a) above been acquired by any other person for such a consideration. (5) If the value of the property when it becomes held on the trusts referred to in subsection (1)(b) above is lower than so much of the value transferred on the death of the person referred to in subsection (1)(a) as is attributable to the property, subsection (2) above shall apply to the property only to the extent of the lower value. (6) For the purposes of this section, a person shall be treated as acquiring property for a consideration in money or money’s worth if he becomes entitled to it as a result of transactions which include a disposition for such consideration (whether to him or another) of that or other property.

.

2

At the end of paragraph 3 of Schedule 4 to the 1984 Act there shall be added—

(5A) In the case of property which, if a direction is given under paragraph 1 above, will be property to which paragraph 15A below applies, sub-paragraph (1)(b) above shall have effect as if for the reference to the settlor there were substituted a reference to either the settlor or the person referred to in paragraph 15A(2).

.

3

After paragraph 15 of that Schedule there shall be inserted—

(15A) (1) In relation to settled property to which this paragraph applies, the provisions of this Part of this Schedule shall have effect with the modifications set out in the following sub-paragraphs. (2) This paragraph applies to property which become property to which paragraph 8 above applies on the occasion of a transfer of value which was made by a person beneficially entitled to an interest in possession in the property, and which (so far as the value transferred by it was attributable to the property)— (a) was an exempt transfer by virtue of the combined effect of either— (i) sections 27 and 57(5) of this Act, or (ii) sections 27 and 57A of this Act, and (b) would but for those sections have been a chargeable transfer; and in the following sub-paragraphs “the person entitled to the interest in possession” means the person above referred to. (3) Paragraph 9(2) shall have effect as if for the reference to the settlor there were substituted a reference to either the settlor or the person entitled to the interest in possession. (4) Paragraph 10 shall not apply if the person entitled to the interest in possession had died at or before the time when the property become property to which paragraph 8 above applies; and in any other case shall have effect with the substitution in sub-paragraph (1) of the following words for the words from “on becoming”— (a) on becoming property to which the person entitled to the interest in possession is beneficially entitled, or (b) on becoming— (i) property to which that person’s spouse is beneficilly entitled, or (ii) property to which that person’s widow or widower is beneficially entitled if that person has died in the two years preceding the time when it becomes such property; but paragraph (b) above applies only where the spouse, widow or widower would have become beneficially entitled to the property on the termination of the interest in possession had the property not then become property to which paragraph 8 above applies. (5) Paragraph 11 shall not apply. (6) Sub-paragraphs (1) to (3) of paragraph 14 shall have effect as if for the references to the settlor there were substituted references to the person entitled to the interest in possession. (7) Sub-paragraph (4) of paragraph 14 shall have effect with the insertion after paragraph (b) of the words “and(c) was, in relation to either of those settlements, property to which paragraph 15A below applied,”, and with the substitution for the words from “settlor shall” onwards of the words “person entitled to the interest in possession shall, if the Board so determine, be construed as references to the person who was the settlor in relation to the current settlement.”. (8) Sub-paragraph (5) of paragraph 14 shall have effect with the insertion after paragraph (b) of the words “and (c) was, in relation to any of those settlements, property to which paragraph 15A below applied,”, and with the substitution for the words from “settlor shall” onwards of the words “person entitled to the interest in possession shall, if the Board so determine,be construed as references to any person selected by them who was the settlor in relation to any of the previous settlements or the current settlement.” (9) Except in a case where the Board have made a determination under sub-paragraph (4) or (5) of paragraph 14, sub-paragraphs (6) and (7) of that paragraph shall have effect as if for the references to the settlor there were substituted references to the person entitled to the interest in possession. (10) Sub-paragraph (9) of paragraph 14 shall have effect with the substitution for the words “(if the settlement was made on death)” of the words “ (if the person entitled to the interest in possession had died at or before the time when the property became property to which paragraph 8 applies) ”.

4

Paragraph 1 above shall have effect in relation to deaths occurring on or after 17th March 1987.

5

Paragraph 2 above shall have effect in relation to directions given on or after 17th March 1987.

6

Paragraph 3 above shall have effect where the occasion of the charge or potential charge to tax under paragraph 8 of Schedule 4 to the 1984 Act falls on or after 17th March 1987.

SCHEDULE 10

Interpretation

1

• (1) In this Schedule—

• “month” means calendar month;

• “nominal volume” shall be construed in accordance with paragraph 7 below;

• “nominated price” shall be construed in accordance with paragraph 6 below;

• “nominated” means a nomination made in such manner as may be prescribed by regulations made by the Board;

• “proposed sale” ... shall be construed in accordance with paragraph (a) of sub-paragraph (1) of paragraph 2 below;

• “proposed delivery month” shall be construed in accordance with paragraph 12A below;

• “proposed transaction” means one falling within paragraph 2(1) below;

• “regulations made by the Board” means regulations under section 61(8) of this Act; and

• “Treasury regulations” means regulations under 61(7) of this Act.

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

• (3) Where an amount of oil is required to be delivered to the OGA pursuant to a notice served by it, any oil which is inadvertently delivered to him in excess of the amount required shall be treated for the purposes of sub-paragraph (2) above as delivered pursuant to the notice.

Transactions which may be nominated

2

• (1) The proposed transactions which may be nominated by a participator in an oil field for the purposes of this Schedule are—

• (a) proposed sales at arms’s length by the participator of specified quantities of oil for delivery from that oil field; and

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

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

• (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

....

• (2) Where a proposed sale is nominated before a contract of sale comes into being, any reference in this Schedule to the contract of sale is a reference to the subsequent contract for the sale of oil in accordance with the terms of the nomination; and, accordingly, if no such contract of sale comes into being, the nomination of the proposed sale shall be of no effect.

• (3) A particpator may not nominate a proposed sale if—

• (a) under the terms of the contract of sale as orginally entered into, the party undertaking to sell the oil is someone other than the participator; or

• (b) it is of a description prescibed for the purposes of this sub-paragraph by regulations made by the board.

Period for which nomination has effect

3

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

Timing of nominations

4

• (1) If a nomination is made during business hours it shall be effective only if—

• (a) it is made within the period of two hours beginning with the transaction base time, and

• (b) it satisfies the requirements of paragraph 5.

• (1A) If a nomination is made outside business hours it shall be effective only if—

• (a) it is made within the period of two hours beginning with the transaction base time, and

• (b) it satisfies the requirements of paragraph 5 or 5A.

• (1B) For the purposes of this paragraph—

• (a) the transaction base time of a proposed transaction is such time on such date as the Board shall prescribe by regulations, and

• (b) “ business hours ” means the period beginning with 09.00 and ending with 17.00 ( UK time) on a business day (within the meaning of the Bills of Exchange Act 1882 (c. 61)).

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

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

• (3) The transaction base time prescribed for a proposed sale may be a time earlier than the time on which a legally binding agreement for the sale of the oil in question comes into being but may not be later than the time on which there is an agreed price at which any oil which is to be delivered pursuant to the contract of sale will be sold.

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

Content of nomination

5

• (1) The requirements of this paragraph for a nomination in respect of a proposed transaction are,—

• (a) the name of the participator;

• (b) ..., the name of the person to whom the oil is to be sold;

• (c) the field from which the oil is to be delivered ...;

• (d) the nominated price of the oil to be delivered ...;

• (e) the nominal volume of that oil;

• (f) the proposed delivery month;

• (g) the transaction base time; and

• (h) such other information as may be prescribed by the Board.

• (2) A nomination made under this paragraph shall include a declaration that it is correct and complete and, in the case of a nomination of a proposed sale which is made before the contract of sale comes into being, shall also include a declaration that, to the best of the knowledge and belief of the participator making the nomination, a contract of sale will come into being in accordance with the terms of the nomination.

• (3) Where a participator fraudently or negligently furnishes any incorrect information or makes any incorrect declaration in or in connection with a nomination made under this paragraph he shall be liable to a penalty not exceeding £50,000 or, in the case of fraud, £100,000 and the nomination shall not be effective.

Nominated price

6

• (1) ... in the case of a proposed sale, the “nominated price”, in relation to the oil which is to be delivered pursuant to the sale, is the price specified in the contract of sale (expressed as a unit price) or, as the case may be, the formula under which, in accordance with the contract, the price for that oil (as so expressed) is to be determined.

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

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

Nominal volume

7

• (1) Subject to sub-paragraph (3) below, in the case of a proposed sale, the nominal volume means the quantity of oil which it is proposed should be delivered under the contract of sale in the proposed delivery month.

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

• (3) In the case of any proposed transaction, the nominal volume means the quantity of oil expressed in such manner as may be prescribed by regulations made by the Board.

• (4) In any case where—

• (a) apart from this sub-paragraph, the nominal volume in any proposed transaction would be expressed as a specific volume of oil, plus or minus a particular tolerance, and

• (b) that tolerance exceeds the limits prescribed for the purposes of this Schedule by regulations made by the Board,

the nominal volume shall for those purposes be taken to be the specific volume referred to in paragraph (a) above, plus or minus the maximum tolerance permitted by the regulations.

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

• (6) The Board may by regulations prescribe that in specified circumstances the nominal volume in relation to a delivery shall be treated as greater or less than the nominal volume ascertained in accordance with the preceding provisions of this paragraph.

• (7) Regulations under sub-paragraph (6)—

• (a) shall be made by statutory instrument, and

• (b) may not be made unless a draft has been laid before and approved by resolution of the House of Commons.

Revision of nominations

8

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

Effective volume for nominated transactions

9

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

Aggregate effective volume for a month

10

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

Aggregate nominated proceeds for a month

11

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

Blended oil

12

• (1) If a person is a participator in two or more oil fields which, in relation to any blended oil, are or are included among the originating fields, then, in accordance with regulations made by the Board, he may make a nomination, having effect with respect to all the originating fields in which he is a participator, of a proposed sale ... of the blended oil; and the preceding provisions of this Schedule shall have effect in relation to such a nomination subject to such modifications as may be prescribed by regulations made by the Board.

• (2) In sub-paragraph (1) above “ blended oil ” and “ the originating fields ” have the same meaning as in section 63 of this Act.

Returns

13

In paragraph 2 of Schedule 2 to the principal Act (returns by participators) at the end of sub-paragraph (3) there shall be inserted the following sub-paragraph—

(3A) A return under this paragraph for a chargeable period shall— (a) state the amount (if any) which, in the case of the participator, is to be brought into account for that period in accordance with section 2(5)(e) of this Act; (b) contain such particulars as the Board may prescribe (whether before or after the passing of the Finance Act 1987) with respect to any nominated transaction under Schedule 10 to that Act— (i) the effective volume of which forms part of the participator’s aggregate effective volume (construing those terms in accordance with that Schedule) for any calendar month comprised in that chargeable period; and (ii) which has not led to deliveries of oil or relevant appropriations of which particulars are included in the return by virtue of sub-paragraph (2) above; and (c) contain such other particulars as the Board may prescribe (as mentioned above) in connection with the application of section 61 of and Schedule 10 to the Finance Act 1987.

SCHEDULE 11

Part I — Amendments of Paragraphs 2, 2a and 3 of Schedule 3 to Principal Act

1

• (1) Paragraph 2 of Schedule 3 (definition of market value of oil) shall be amended in accordance with this paragraph.

• (2) For sub-paragraph (1) there shall be substituted—

(1) The market value of any oil in any calendar month shall be determined for the purposes of this Part of this Act in accordance with this paragraph.

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

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

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

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

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

2

In paragraph 2A of that Schedule (modifications in the case of oil consisting of gas)—

• (a) in sub-paragraphs (1) and (3) for “(1) and (2)” there shall be substituted “ (1) to (2D) ”;

• (b) in sub-paragraph (2) for “(2)(a)” in each place where it occurs, there shall be substituted “ (2)(d) ”; and

• (c) in sub-paragraph (3) for “(2)(b)” there shall be substituted “ (2)(e) ”.

3

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

Part II — Consequential Amendments of Principal Act

4

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

5

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

6

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

7

In Schedule 9 (sales etc. at undervalue or overvalue) in paragraph 6 (determination of arm's length price) for sub-paragraph (2) there shall be substituted—

(2) In this paragraph "calendar month" means a month of the calendar year and "material time", in relation to a calendar month, means noon on the middle day of the month which, in the case of a month containing an even number of days, shall be taken to be the last day of the first half of the month.

SCHEDULE 12

Interpretation

1

• (1) In this Schedule—

• “HMRC” means Her Majesty's Revenue and Customs;

• “method of allocation” means a method for making an allocation of blended oil for the purposes of section 63 that has been selected by the participators in the originating fields (including such a method that has been amended in accordance with this Schedule).

• (2) In this Schedule a reference to a suitable method of allocation is a reference to a method which secures that allocation of blended oil is just and reasonable (for the purposes of the oil taxation legislation).

Method of allocation not suitable

2

• (1) This paragraph applies if it appears to HMRC that—

• (a) a method of allocation that has been used in respect of a chargeable period was not suitable, or

• (b) a method of allocation that is proposed to be used in respect of a chargeable period would not be suitable.

• (2) HMRC may give notice to each of the participators in the originating fields—

• (a) informing the participators of what appears to HMRC to be the case, and

• (b) proposing amendments to the method of allocation.

• (3) If HMRC give notice, the allocation of the blended oil for the purposes of section 63 in respect of the chargeable period is to be redetermined, or determined, using the method of allocation as amended in accordance with the notice.

• (4) Sub-paragraph (3) is subject to—

• (a) the following provisions of this Schedule,

• (b) any subsequent notice given under this paragraph, and

• (c) any amendment to the method of allocation made by the participators in the originating fields.

Appeals

3

• (1) Where HMRC give notice to the participators in the originating fields under paragraph 2(2) above, any of those participators may appeal ... against the notice by giving notice in writing to HMRC within thirty days after the date of the notice given by HMRC.

• (2) Where notice of appeal is given under sub-paragraph (1) above—

• (a) HMRC shall give notice in writing to all those participators in the originating fields who have not given notice of appeal and they shall, by virtue of that notice, become parties to the appeal ....

• (b) if, before the determination of the appeal by the tribunal, HMRC and the participators in the originating fields agree that the method of allocation concerned should not be amended or should have effect with particular amendments, the same consequences shall ensue as if the tribunal had determined the appeal to that effect;

• (c) if, on an appeal notified to the tribunal, it appears to the tribunal that the method of allocation concerned is satisfactory, with or without modifications, for the purposes of the oil taxation legislation the tribunal shall allow the appeal and, where appropriate, shall amend the method of allocation accordingly for those purposes; and

• (d) paragraphs 14(2), (8) and (11) and 14A to 14I of Schedule 2 to the principal Act shall apply in relation to the appeal as they apply in relation to an appeal against an assessment or determination made under that Act subject to the following modifications—

• (i) any reference to an agreement under paragraph 14(9) shall be construed as a reference to an agreement under sub-paragraph (2)(b) above;

• (ii) any other modifications that are necessary.

• (3) If the method of allocation is amended in accordance with this paragraph, the allocation of the blended oil for the purposes of section 63 in respect of the chargeable period is to be redetermined, or determined, using the method of allocation as so amended.

• (4) Sub-paragraph (3) is subject to—

• (a) any subsequent notice given under this paragraph, and

• (b) any amendment to the method of allocation made by the participators in the originating fields.

4

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SCHEDULE 13

Part I — Section to be Inserted After Section 5A of the Principal Act

Part II — Amendments Relating to the New Allowance

The principal Act

1

In section 2(9) of the principal Act (amounts to be taken into account in respect of expenditure) at the end of paragraph (f) there shall be added

and (g) any research expenditure allowable in the case of the participator under section 5B of this Act which, on a claim made by him under Schedule 7 to this Act, has been allowed under that Schedule before the Board have made an assessment to tax or a determination on or in relation to him for the period in respect of the field, so far as that expenditure has not been taken into account in any previous assessment to tax or determination.

2

In section 3 of that Act, in subsection (3) (expenditure not allowable under that section if already allowed under other provisions) after the words “section 5A” there should be inserted “ or section 5B ”.

3

In section 9 of that Act (limit on amount of tax payable) in subsection (2)(a)(ii) for the words “and (f)” there shall be inserted “ (f) and (g) ”.

4

In paragraph 2 of Schedule 2 to that Act (returns by participators) in sub-paragraph (2A) (initial return to include particulars of certain expenditure already claimed) for the words “exploration and appraisal expenditure to which section 5A” there shall be substituted “ expenditure to which section 5A or section 5B ”.

5

• (1) In Schedule 7 to that Act (claim for allowance of certain exploration expenditure etc.) at the end of paragraph 1(1)(b) there shall be added

or (c) of any research expenditure allowable under section 5B of this Act

.

• (2) In paragraph 1(3) of that Schedule after the words “section 5A” there shall be inserted “ or section 5B ”.

The Petroleum Revenue Tax Act 1980

6

In the Schedule to the Petroleum Revenue Tax Act 1980 (computation of payment on account) in paragraph 2(4) for the words “or (f)” there shall be substituted “ (f) or (g) ”.

The Finance Act 1980

7

In Schedule 17 to the Finance Act 1980 (transfers of interests in oil fields) after paragraph 16A (exploration and appraisal expenditure) there shall be inserted—

(16B) In relation to research expenditure to which section 5B applies, paragraph 16 above has effect as if any reference therein to section 5 were a reference to section 5B.

The Finance Act 1981

8

In section 111 of the Finance Act 1981 (restriction of expenditure supplement) in subsection (3)(a) the words following “the principal Act” (which specify certain types of expenditure and losses) shall be omitted.

The Finance Act 1984

9

• (1) In section 113 of the Finance Act 1984 (restriction on PRT reliefs), in subsection (1)—

• (a) the words “abortive exploration expenditure or exploration and appraisal” shall be omitted; and

• (b) after the words “section 5A” there shall be inserted “ or section 5B ”.

• (2) In subsection (6) of that section—

• (a) after the words “section 5A” there shall be inserted “ or section 5B ”; and

• (b) for the words “paragraph 16 or paragraph 16A” there shall be substituted “ paragraphs 16 to 16B ”.

Part III — Receipts to be Set Against Allowable Expenditure

10

In this Part of this Schedule—

• “allowable expenditure” means expenditure which, in accordance with section 5B of the principal Act, is allowable on a claim made by a participator under Schedule 7 to that Act; and

• “qualifying receipt” means a sum the amount of which falls, by virtue of subsection (6) of section 5 of the principal Act, to be applied by way of reduction in the amount of expenditure which would otherwise be allowable expenditure.

11

• (1) A return made by a participator for a chargeable period under paragraph 2 of Schedule 2 to the principal Act shall give details of any qualifying receipt (whether received by him or by a person connected with him) of which details have not been given in a return made by him for an earlier chargeable period.

• (2) Section 1122 of the Corporation Tax Act 2010 (connected persons) applies for the purposes of this paragraph.

12

• (1) This paragraph applies where—

• (a) a claim for allowable expenditure has been made by a participator under Schedule 7 to the principal Act; and

• (b) as a result of the receipt (whether before or after the making of the claim) of a qualifying receipt, the amount allowed by way of allowable expenditure on the claim exceeds what it should have been.

• (2) In determining, in a case where this paragraph applies, the assessable profit or allowable loss accruing to the participator in the chargeable period in which the qualifying receipt is recived, the amount of the excess referred to in sub-paragraph (1)(b) above shall be taken into account under section 2 of the principal Act as an amount which is to be included among the positive amounts referred to in subsection (3)(a) of that section.

• (3) In the application of section 9 of the principal Act (limit on amount of tax payable) to a chargeable period in respect of which sub-paragraph (2) above applies, the amount of the excess referred to in sub-paragraph (1)(b) above shall be deducted from the amount which would otherwise be the total ascertained under subsection (2)(a)(ii) of that section and, if the amount of that excess is greater than the amount which would otherwise be that total, that total shall be a negative amount equal to the difference.

SCHEDULE 14

Part I — Elections

General

1

• (1) An election shall be made in such form as may be prescribed by the Board.

• (2) Without prejudice to sub-paragraph (1) above, an election shall specify—

• (a) the expenditure in respect of which it is made and the amount of that expenditure (in this Part of this Schedule referred to as “the elected amount”), which shall not exceed 10 per cent., which is to be allowable under the principal section;

• (b) the field of origin and the receiving field;

• (c) the notice, agreement or determination which, under paragraph 2 below, determines the earliest date on which the election could be made;

• (d) in a case where the elected amount is to be allowable in respect of more than one receiving field, the proportions in which that amount is to be apportioned between those fields; and

• (e) in the case of expenditure incurred by a company which is an associated company of the participator for the purposes of the principal section, the name of that company.

• (3) An election shall be irrevocable.

Earliest date for an election

2

• (1) No election may be made in respect of an amount of expenditure until a final decision as to supplement has been made on a claim in respect of that amount under Schedule 5 or Schedule 6 to the principal Act.

• (2) For the purposes of this paragraph, a final decision as to supplement is made in relation to an amount of expenditure when—

• (a) the Board give to the responsible person or, as the case may be, the participator notice under paragraph 3 of Schedule 5 to the principal Act stating that amount of expenditure as an amount qualifying for supplement; or

• (b) after notice of appeal has been given against a decision on a claim, an agreement is made as mentioned in sub-paragraph (1) of paragraph 6 of Schedule 5 to the principal Act and that amount of expenditure is, for the purposes of that sub-paragraph, the appropriate amount of the expenditure claimed as qualifying for supplement; or

• (c) on an appeal against a decision on a claim, there is a determination by the tribunal or the court by virtue of which that amount of expenditure falls (under paragraph 7(2) or paragraph 8(2) of Schedule 5 to the principal Act) to be treated for the purposes of Part I of that Act as qualifying for supplement.

• (3) Nothing in Schedule 5 to the principal Act relating to the date on which an amount of expenditure is to be treated as having been allowed as qualifying for supplement applies for the purposes of sub-paragraph (2) above.

Latest date for election

3

• (1) Subject to sub-paragraph (2) below, an election by a participator in respect of a particular amount of expenditure may be made at any time before—

• (a) the Board make, for a chargeable period of the field of origin, an assessment or determination which takes account of that amount of expenditure as qualifying for supplement; and

• (b) notice of that assessment or determination is given to the participator or, as the case may be, the associated company, under paragraph 10 of Schedule 2 to the principal Act.

• (2) Where the earliest date for the making of an election in respect of a particular amount of expenditure is a date determined under paragraph 2(2)(b) or paragraph 2(2)(c) above, such an election may be made at any time before notice is given as mentioned in sub-paragraph (1)(b) above or, if it is later, before the expiry of the period of thirty days beginning on the day following that earliest date.

Two or more elections relating to same expenditure

4

Where more than one election is made in respect of the same amount of expenditure—

• (a) the maximum of 10 per cent

Part II — Effect on Receiving Field

5

• (1) In relation to an election, the assessment to tax or determination referred to in subsection (4)(a) of the principal section is that which is first made after the relevant date on or in relation to the participator by whom the election is made.

• (2) Subject to paragraphs 6 and 7 below, the relevant date for the purposes of sub-paragraph (1) above is the date of the election.

6

In any case where—

• (a) an election is made in the period of thirty days beginning on the day following that on which the Board give notice under paragraph 3 of Schedule 5 to the principal Act stating the expenditure in respect of which the election is made as expenditure qualifying for supplement, and

• (b) after the date of that notice but on or before the date of the election, an assessment to tax or determination for the receiving field is made on or in relation to the participator making the election,

the relevant date for the purposes of paragraph 5(1) above is the date of the notice referred to in paragraph (a) above; and the assessment or determination referred to in paragraph (b) above shall be amended accordingly.

7

In any case where, following the giving of a notice of appeal, an election is made in respect of expenditure which (under paragraph 6(1), paragraph 7(2) or paragraph 8(2) of Schedule 5 to the principal Act) is treated for the purposes of Part I of that Act as having been allowed as qualifying for supplement on the date on which the notice of appeal was given, the relevant date for the purposes of paragraph 5(1) above is the date on which that notice was given; and in any assessment to tax or determination (relating to the field of origin or the receiving field) all such adjustments or further adjustments shall be made as are necessary in consequence of the election.

Part III — Relevant New Fields and Associated Companies

Relevant new fields

8

• (1) For the purposes of the principal section “relevant new fields” means, subject to sub-paragraph (2) below, an oil field—

• (a) no part of which lies in a landward area, within the meaning of the Petroleum (Production) Regulations 1982 or in an area to the East of the United Kingdom and between latitudes 52° and 55° North; and

• (b) for no part of which consent for development has been granted to the licensee by the Secretary of State before 17th March 1987; and(c) for no part of which a programme of development had been served on the licensee or approved by the Secretary of State before that date.

• (2) In determining, in accordance with sub-paragraph (1) above, whether an oil field (in this sub-paragraph referred to as “the new field”) is a relevant new field, no account shall be taken of a consent for develoment granted before 17th March 1987 or a programme of development served on the licensee or approved by the Secretary of State before that date if—

• (a) in whole or part that consent or programme related to another oil field for which a determination under Schedule 1 to the principal Act was made before the determination under that Schedule for the new field; and

• (b) on or after 17th March 1987 a consent for development is or was granted or a programme of development is or was served on the licensee or approved by the OGA and that consent or programme relates, in whole or in part, to the new field.

9

• (1) In paragraph 8 above “development” means—

• (a) the erection or carrying out of permanent works for the purpose of getting oil from the field or for the purpose of conveying oil won from the field to a place on land; or

• (b) winning oil from the field otherwise than in the course of searching for oil or drilling wells;

and consent for development does not include consent which is limited to the purpose of testing the characteristics of an oil-bearing area and does not relate to the erection or carrying out of permanent works.

• (2) In sub-paragraph (1) above “permanent works” means any structures or other works whatsoever which are intended by the licensee to be permanent and are neither designed to be moved from place to place without major dismantling nor intended by the licensee to be used only for searching for oil.

Associated companies

10

• (1) For the purposes of the principal section, a company is an associated company of a participator (being itself a company) making an election under that section if—

• (a) throughout that part of the relevant period in which both were in existence one was a 51 per cent. subsidary of the other and the other was not a 51 per cent. subsidary of any company; or

• (b) each of them was, throughout that part of the relevant period in which it was in existence, a 51 per cent, subsidary of a third company which was not itself a 51 per cent. subsidiary of any company.

• (2) In this paragraph “company” means any body corporate and Chapter 3 of Part 24 of the Corporation Tax Act 2010 (subsidiaries) applies for the purposes of this paragraph.