LegalizeReform history
Finance (No. 2) Act 1987
7 versions
· 1987-07-23
2011-04-22
Finance (No. 2) Act 1987
2010-04-08
Finance (No. 2) Act 1987
2010-04-01
Finance (No. 2) Act 1987
2006-07-19
Finance (No. 2) Act 1987
2006-04-06
Finance (No. 2) Act 1987
1999-06-30
Finance (No. 2) Act 1987
Changes on 1999-06-30
@@ -1,36 +1,14 @@
# Finance (No. 2) Act 1987
## PART I — Income Tax, Corporation Tax and Capital Gains Tax
### CHAPTER I — Profit-Related Pay
## Part I — Income Tax, Corporation Tax and Capital Gains Tax
### Chapter I — Profit-Related Pay
### Preliminary
#### Interpretation.
##### 1
- (1) In this Chapter—
- “employment” means an office or employment whose emoluments fall to be assessed under Schedule E, and related expressions have corresponding meanings;
- “employment unit” means an undertaking, or that part of an undertaking, to which a profit-related pay scheme relates;
- “pay” (except in the expression “profit-related pay”) means emoluments paid under deduction of tax pursuant to section 204 of the Taxes Act (pay as you earn), reduced by any amounts included in them by virtue of Chapter II of Part III of the Finance Act 1976;
- “profit period” means an accounting period by reference to which any profit-related pay is calculated;
- “profit-related pay” means emoluments from an employment which are paid in accordance with a profit-related pay scheme;
- “profit-related pay scheme” means a scheme providing for the payment of emoluments calculated by reference to profits;
- “profits” or “losses”, in relation to a profit period, means the amount shown in the account prepared for that period in accordance with the relevant profit-related pay scheme as the profit, or as the case may be the loss, on ordinary activities after taxation;
- “registered scheme” means a profit-related pay scheme registered under this Chapter;
- “scheme employer” means the person on whose application a profit-related pay scheme is or may be registered under this Chapter.
- (2) References in this Chapter to the employees to whom a profit-related pay scheme relates are references to the employees who will receive any payments of profit-related pay under the scheme.
#### Taxation of profit-related pay.
@@ -378,27 +356,13 @@
- (6) For the purposes of this Chapter, “independent accountant”, in relation to a scheme, includes a Scottish firm all the partners of which are independent accountants in relation to the scheme.
### CHAPTER II — Personal Pension Schemes
### Chapter II — Personal Pension Schemes
### Preliminary
#### Interpretation.
##### 18
In this Chapter—
- “approved”— in relation to a scheme, means approved by the Board under this Chapter, and in relation to arrangements, means made in accordance with a scheme which is for the time being, and was when the arrangements were made, an approved scheme, but does not refer to cases in which approval has been withdrawn;
- “authorised insurance company” means either— a person authorised under section 3 or 4 of the Insurance Companies Act 1982 to carry on long term business and acting through a branch or office in the United Kingdom, or a society registered as a friendly society under the Friendly Societies Act 1974 or the Friendly Societies Act (Northern Ireland) 1970;
- “member”, in relation to a personal pension scheme, means an individual who makes arrangements in accordance with the scheme;
- “personal pension arrangements” means arrangements made by an individual in accordance with a personal pension scheme;
- “personal pension scheme” means a scheme whose sole purpose is the provision of annuities or lump sums under arrangements made by individuals in accordance with the scheme;
- “scheme administrator” means the person referred to in section 27 below.
#### Approval of schemes.
@@ -1140,15 +1104,13 @@
Schedule 2 to this Act (which makes minor and consequential amendments to certain enactments relating to retirement annuities etc.) shall have effect.
### CHAPTER III — General
### Chapter III — General
### Pension and share schemes
#### Occupational pension schemes.
##### 58
Schedule 3 to this Act (which makes amendments to enactments relating to occupational pension schemes and amends certain existing schemes) shall have effect.
#### Employee share schemes.
@@ -1324,58 +1286,11 @@
##### 64
- (1) In Schedule 7 to the Capital Allowances Act 1968 (special rules for sales of property between connected persons etc.) at the end of sub-paragraph (3) of paragraph 4 (which in certain cases excludes the right to elect to substitute a sale price or other sum for market value for the purposes of Parts I and II of that Act) there shall be added the words “nor may such an election be made if the buyer is a dual resident investing company, within the meaning of section 63 of the Finance (No. 2) Act 1987”.
- (2) In section 252 of the Taxes Act (company reconstructions without change of ownership) at the beginning of subsection (2) (which, in relation to capital allowances, provides for continuity as between the successor and the predecessor) there shall be inserted the words “Subject to subsection (2A) below” and at the end of that subsection there shall be inserted the following subsection—
> (2A) Subsection (2) above does not apply if the successor is a dual resident investing company, within the meaning of section 63 of the Finance (No. 2) Act 1987.
- (3) In section 273 of the Taxes Act (disposals of assets within a group of companies to be on a no-gain/no-loss basis) in subsection (2) (exclusions) at the end of paragraph (c) there shall be inserted the words
> or
> (d) a disposal to a dual resident investing company, within the meaning of section 63 of the Finance (No. 2) Act 1987
.
- (4) In section 276 of the Taxes Act (replacement of business assets by members of a group) at the beginning of subsection (1) there shall be inserted the words “Subject to subsection (1A) below” and at the end of that subsection there shall be inserted the following subsection—
> (1A) Subsection (1) above does not apply where so much of the consideration for the disposal of the old assets as is applied in acquiring the new assets or the interest in them is so applied by a member of the group which is a dual resident investing company; and in this subsection—
> (a) “the old assets” and “the new assets” have the same meaning as in section 115 of the Capital Gains Tax Act 1979; and
> (b) “dual resident investing company” has the same meaning as in section 63 of the Finance (No. 2) Act 1987.
- (5) In subsection (6) of section 44 of the Finance Act 1971 (disposal value of machinery or plant in relation to capital allowances) in paragraph (b) (if sale is at an undervalue, disposal value is equal to market value except where, among other matters, the buyer’s expenditure qualifies for capital allowances) in sub-paragraph (i) after the words “(scientific research allowances)” there shall be inserted “and the buyer is not a dual resident investing company, within the meaning of section 63 of the Finance (No. 2) Act 1987, which is connected with the seller within the terms of section 533 of the Taxes Act”.
- (6) In paragraph 13 of Schedule 8 to the Finance Act 1971 (right of connected persons to elect, in relation to capital allowances, for continuity as between the successor and the predecessor) after the words “Taxes Act” there shall be inserted “and the successor is not a dual resident investing company, within the meaning of section 63 of the Finance (No. 2) Act 1987”.
- (7) In this section—
- (a) subsections (1) and (5) above apply in relation to sales on or after 1st April 1987;
- (b) subsections (2) and (6) above apply where the successor in question begins to carry on the trade on or after that date;
- (c) subsection (3) above applies in relation to disposals on or after that date; and
- (d) subsection (4) above applies where the new assets (within the meaning of section 115 of the Capital Gains Tax Act 1979) are acquired on or after that date.
#### Controlled foreign companies: acceptable distribution policy.
##### 65
- (1) In Schedule 17 to the Finance Act 1984 (controlled foreign companies: cases excluded from direction-making powers) Part I (acceptable distribution policy) shall be amended in accordance with this section.
- (2) In sub-paragraph (1) of paragraph 2 (payment of dividend for accounting period of controlled foreign company) after paragraph (b) there shall be inserted the following paragraph—
> (bb) the dividend is paid at a time when the company is not resident in the United Kingdom (whether or not it is at that time a controlled foreign company); and
.
- (3) In sub-paragraph (1) of paragraph 4 (payment of dividend by a third company) after paragraph (b) there shall be inserted the following paragraph—
> (bb) the subsequent dividend is paid at a time when the company paying it is not resident in the United Kingdom, and
.
- (4) This section applies in any case where the dividend concerned is paid on or after 17th March 1987.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Offshore funds.
@@ -1473,13 +1388,13 @@
> or
> (c) to an authorised officer of any body specified in the first column of the following Table for the purposes of functions of that body under any enactment specified in relation to it in the second column of the Table.
| Body | Enactment |
| *Body* | *Enactment* |
| --- | --- |
| A local education authority in England and Wales. | Section 8 of the Employment and Training Act 1973. |
| An education authority in Scotland. | Section 126 of the Education (Scotland) Act 1980. |
| The Northern Ireland Training Authority. | The Industrial Training (Northern Ireland) Order 1984. |
| A local planning authority within the meaning of the Town and Country Planning Act 1971 and any board which exercises for any area the functions of such an authority. | Part II of the Town and Country Planning Act 1971. |
| A planning authority as defined in section 172(3) of the Local Government (Scotland) Act 1973. | Town and Country Planning (Scotland) Act 1972. |
| A planning authority as defined in section 172(3) of the Local Government (Scotland) Act 1973. | Part II of the Town and Country Planning (Scotland) Act 1972. |
| The Welsh Development Agency. | The Welsh Development Agency Act 1975. |
| The Scottish Development Agency. | The Scottish Development Agency Act 1975. |
| The Development Board for Rural Wales. | The Development of Rural Wales Act 1976. |
@@ -1488,23 +1403,11 @@
| A development corporation within the meaning of the New Towns (Scotland) Act 1968. | Section 3 of the New Towns (Scotland) Act 1968. |
| A new town commission within the meaning of the New Towns Act (Northern Ireland) 1965. | Section 7 of the New Towns Act (Northern Ireland) 1965. |
- (3) In subsection (6) for the words “or paragraph (b) of subsection (4)” there shall be substituted “paragraph (b) or paragraph (c) of subsection (4) above”.
- (3) In subsection (6) for the words “or paragraph (b) of subsection (4)” there shall be substituted “ paragraph (b) or paragraph (c) of subsection (4) above ”.
#### Lloyd’s underwriters.
##### 70
- (1) This section applies where, in accordance with the rules or practice of Lloyd’s and in consideration of the payment of a premium, one underwriter agrees with another to meet liabilities arising from the latter’s business for an underwriting year so that the accounts of the business for that year may be closed.
- (2) In computing for the purposes of income tax the profits or gains of his business, the amount of the premium shall be deductible as an expense of the underwriter by whom it is payable only to the extent that it is shown not to exceed a fair and reasonable assessment of the value of the liabilities in respect of which it is payable.
- (3) Any part of a premium which, by virtue of subsection (2) above, is not deductible as an expense of the underwriter by whom it is payable shall be disregarded in computing for the purposes of income tax the profits or gains of the business of the underwriter to whom it is payable.
- (4) The assessment referred to in subsection (2) above shall be taken to be fair and reasonable only if it is arrived at with a view to producing the result that a profit does not accrue to the underwriter to whom the premium is payable but he does not suffer a loss.
- (5) In this section “underwriter” means an underwriting member of Lloyd's, and expressions used in Schedule 10 to the Taxes Act have the same meanings as in that Schedule.
- (6) This section has effect in relation to premiums payable in connection with the closing of the accounts of an underwriter’s business for an underwriting year ending in the year of assessment 1985-86 or any later year of assessment.
#### Relief for losses on unquoted shares in trading companies.1980 c. 48.
@@ -1521,63 +1424,19 @@
##### 72
- (1) In section 76 of the Finance Act 1982 (capital allowances for dwelling-houses let on assured tenancies) in subsection (2) (provisions to have effect only where expenditure is incurred before 1st April 1987) for “1987” there shall be substituted “1992”.
- (2) In any case where—
- (a) by reason only of the enactment (by the Housing and Planning Act 1986) of section 56B of the Housing Act 1980 (extension of assured tenancies scheme to cases where works have been carried out) an approved body is entitled to an initial allowance in respect of any expenditure under Schedule 12 to the Finance Act 1982 (capital allowances for dwelling-houses let on assured tenancies); and
- (b) effect has not been and, apart from this subsection, no longer can be given to the initial allowance referred to in paragraph (a) above,
then, if a claim is made in that behalf before 1st April 1988, all such adjustments shall be made as may be necessary to give effect to that initial allowance.
- (3) Expressions used in subsection (2) above have the same meaning as in Schedule 12 to the Finance Act 1982.
#### Recognised investment exchanges.
##### 73
- (1) The Board may by regulations make provision securing that enactments relating to income tax, corporation tax or capital gains tax and referring to The Stock Exchange have effect, for such purposes and subject to such modifications as may be prescribed by the regulations, in relation to all other recognised investment exchanges (within the meaning of the Financial Services Act 1986), or in relation to such of those exchanges as may be so prescribed.
- (2) The power to make regulations under this section shall be exercisable by statutory instrument, which shall be subject to annulment in pursuance of a resolution of the House of Commons.
### CHAPTER IV — Capital Gains
### Companies' chargeable gains
### Chapter IV — Capital Gains
### Companies’ chargeable gains
#### General rules.
##### 74
- (1) This section has effect with respect to the liability of a company to corporation tax where a chargeable gain accrues to the company on or after 17th March 1987; and in the following provisions of this section—
- (a) “the 1987 date” means 17th March 1987; and
- (b) a “new accounting period” means an accounting period beginning on or after the 1987 date.
- (2) With respect to any new accounting period, section 85 of the Finance Act 1972 (set off of advance corporation tax against liability to corporation tax on income) shall have effect as follows—
- (a) in subsections (1) to (3), for the word “income”, in each place where it occurs, there shall be substituted “profits”; and
- (b) in subsection (6) for the word “income”, in the first place where it occurs, there shall be substituted “profits” and the words from “exclusive” onwards shall be omitted.
- (3) Section 93 of the Finance Act 1972 (reduction of corporation tax liability in respect of chargeable gains) shall not apply with respect to any new accounting period.
- (4) With respect to any new accounting period, section 95 of the Finance Act 1972 (mitigation of corporation tax liability of small companies) shall have effect as follows—
- (a) in subsections (1) and (2) for the word “income”, in each place where it occurs, there shall be substituted “basic profits”;
- (b) in subsection (7), after the word “profits”, in the first place where it occurs, there shall be inserted “(but not the basic profits)”; and
- (c) in subsection (8), for the word “income”, in the first place where it occurs, there shall be substituted “basic profits” and for the words from “is its income”, onwards there shall be substituted “shall be taken to be the amount of its profits for that period on which corporation tax falls finally to be borne”.
- (5) With respect to any new accounting period, in sections 101(2) and 103(4) of the Finance Act 1972 (each of which refer to income as defined in section 85(6) of that Act) for the word “income” there shall be substituted “profits”.
- (6) In Schedule 5 to this Act—
- (a) Part I has effect with respect to the operation of the provisions of the Finance Act 1972 referred to in subsections (2) to (5) above in relation to any accounting period of a company which begins before and ends on or after the 1987 date; and
- (b) Part II has effect with respect to the operation of the enactments referred to in sections 75 and 76 below in relation to any such period.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Life assurance business.
@@ -1675,83 +1534,19 @@
##### 78
Where arrangements within section 75 of the Financial Services Act 1986 provide for pooling of the kind mentioned in subsection (3)(a) of that section in relation to different parts of the property concerned, any question whether the arrangements constitute a single collective investment scheme shall be determined for the purposes of capital gains tax without regard to any entitlement of the participants to exchange rights in one part of the property for rights in another.
#### Building societies: groups of companies.
##### 79
In section 272 of the Taxes Act (groups of companies: definitions) at the end of subsection (2) (references to a company) there shall be added
> and
> (e) a building society within the meaning of the Building Societies Act 1986.
.
#### Roll-over relief not available for gains on oil licences.
##### 80
- (1) A licence under the Petroleum (Production) Act 1934 or the Petroleum (Production) Act (Northern Ireland) 1964 is not and, subject to subsection (2) below, shall be assumed never to have been an asset falling within any of the classes in section 118 of the Capital Gains Tax Act 1979 (classes of assets for the purposes of roll-over relief under section 115 of that Act)9.
- (2) Nothing in subsection (1) above affects the determination of any Commissioners or the judgment of any court made or given before 14th May 1987.
- (3) A reference in subsection (1) above to a provision of the Capital Gains Tax Act 1979 includes a reference to the corresponding enactment in Part III of the Finance Act 1965 which is re-enacted in that provision.
#### Commodity and financial futures and options.
##### 81
- (1) In section 72 of the Finance Act 1985 (commodity and financial futures and traded options) in subsection (1) for the words “traded options” and “traded option” there shall be substituted respectively “qualifying options” and “qualifying option”.
- (2) In subsection (2) of that section, for paragraph (b) (definition of “traded option”) there shall be substituted—
> (b) “qualifying option” means a traded option or financial option as defined in section 137(9) of that Act.
- (3) After that subsection there shall be inserted the following subsections—
> (2A) Notwithstanding the provisions of subsection (2)(a) above, where, otherwise than in the course of dealing on a recognised futures exchange, within the meaning of the principal Act,—
> (a) an authorised person or listed institution enters into a commodity or financial futures contract with another person, or
> (b) the outstanding obligations under a commodity or financial futures contract to which an authorised person or listed institution is a party are brought to an end by a further contract between the parties to the futures contract,
> then, except in so far as any gain or loss arising to any person from that transaction arises in the course of a trade, that gain or loss shall be regarded for the purposes of subsection (1) above as arising to him in the course of dealing in commodity or financial futures.
> (2B) In subsection (2A) above—
> - “authorised person” has the same meaning as in the Financial Services Act 1986, and
> - “listed institution” has the same meaning as in section 43 of that Act.
- (4) In subsection (4) of section 137 of the Capital Gains Tax Act 1979 (options and forfeited deposits) for paragraph (aa) there shall be substituted the following paragraph—
> (aa) a traded option or financial option, or
.
- (5) For subsection (9) of section 137 of the Capital Gains Tax Act 1979 (definitions) there shall be substituted the following subsections—
> (9) In subsection (4) above and sections 138 and 139 below—
> (a) “quoted option” means an option which, at the time of the abandonment or other disposal, is quoted on a recognised stock exchange;
> (b) “traded option” means an option which, at the time of the abandonment or other disposal, is quoted on a recognised stock exchange or a recognised futures exchange; and
> (c) “financial option” means an option which is not a traded option, as defined in paragraph (b) above, but which, subject to subsection (10) below,—
> (i) relates to currency, shares, securities or an interest rate and is granted (otherwise than as agent) by a member of a recognised stock exchange, by an authorised person within the meaning of the Financial Services Act 1986 or by a listed institution within the meaning of section 43 of that Act; or
> (ii) relates to shares or securities which are dealt in on a recognised stock exchange and is granted by a member of such an exchange, acting as agent; or
> (iii) relates to currency, shares, securities or an interest rate and is granted to such an authorised person or institution as is referred to in sub-paragraph (i) above and concurrently and in association with an option falling within that sub-paragraph which is granted by that authorised person or institution to the grantor of the first-mentioned option; or
> (iv) relates to shares or securities which are dealt in on a recognised stock exchange and is granted to a member of such an exchange, including such a member acting as agent;
> and in this subsection “recognised stock exchange” has the meaning given by section 535 of the Taxes Act.
> (10) If the Treasury by order so provide, an option of a description specified in the order shall be taken to be within the definition of “financial option” in subsection (9)(c) above; and the power to make an order under this subsection shall be exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of the House of Commons.
- (6) In subsection (1) of section 138 of the Capital Gains Tax Act 1979 (application of rules as to wasting assets) for paragraph (aa) there shall be substituted the following paragraph—
> (aa) to a traded option or financial option, or
.
- (7) In subsection (4) of section 138 of the Capital Gains Tax Act 1979 (definitions for the purpose of that section) for paragraph (a) there shall be substituted the following paragraph—
> (a) “financial option”, “quoted option” and “traded option” have the meaning given by section 137(9) above, and
.
- (8) This section shall come into force on such day as the Treasury may by order made by statutory instrument appoint.
### CHAPTER V — Taxes Management Provisions
### Chapter V — Taxes Management Provisions
### Company returns
@@ -1759,77 +1554,15 @@
##### 82
- (1) With respect to any notice served after the appointed day, section 11 of the Management Act (return of profits) shall be amended in accordance with this section.
- (2) In subsection (1) for the words from “within the time limited by the notice” to the end there shall be substituted “not later than the final day determined under subsection (4) below a return of the profits and losses of the company containing such information and accompanied by such accounts, statements and reports as, subject to subsection (6) below, may be required in pursuance of the notice.”
- (3) For subsection (2) there shall be substituted the following subsection—
> (2) A notice under this section may require a return of profits and losses arising in any period specified in the notice (in this subsection referred to as “the specified period”) but, if the specified period does not coincide with an accounting period of the company and the company is within the charge to corporation tax in the whole or some part of the specified period, then—
> (a) if an accounting period of the company ends in or at the end of the specified period, the notice shall be taken to require a return for that accounting period or, if there is more than one, for each of them;
> (b) if no accounting period of the company ends in or at the end of the specified period but there is a part of the specified period which does not fall within an accounting period of the company, the notice shall be taken to require a return for that part of the specified period; and
> (c) if the specified period begins in or at the beginning of an accounting period of the company and ends before the end of that period, the notice shall be of no effect and, accordingly, the company shall not be required to make any return pursuant to it.
- (4) For subsections (4) to (6) there shall be substituted the following subsections—
> (4) Subject to subsection (5) below, the final day for the delivery of any return required by a notice under this section shall be whichever is the later of—
> (a) the first anniversary of the last day of the period to which the return relates;
> (b) the first anniversary of the last day of that period of account of the company in which falls the last day of the accounting period (if any) to which the return relates; and
> (c) the end of the period of three months beginning on the day following that on which the notice was served.
> (5) In paragraph (b) of subsection (4) above “period of account” has the same meaning as in the principal Act, but for the purposes of that paragraph the last day of a period of account which is longer than eighteen months shall be treated as the day on which expires the period of eighteen months beginning on the first day of the period of account.
> (6) In relation to a company which—
> (a) is resident in the United Kingdom throughout the period to which the return relates (in this subsection referred to as “the return period”); and
> (b) is required under the Companies Act 1985 to prepare accounts for a period consisting of or including the return period,
> the reference to accounts in subsection (1) above is a reference only to such accounts, containing such particulars and having annexed to them such documents, as are required under that Act to be so prepared.
> (7) The statements which may be required in pursuance of a notice under this section include statements showing the amount of tax (if any) chargeable.
> (8) Different information, accounts, statements and reports may be required in pursuance of a notice under this section in relation to different descriptions of company or different descriptions of profits and losses; and, in particular, information may be so required with respect to tax recoverable by virtue of section 286 of the principal Act (loans to participators) as if it were corporation tax, to advance corporation tax and to corporation tax already paid.
> (9) In the application of this section to a company registered in Northern Ireland, references to the Companies Act 1985 shall be construed as references to the Companies (Northern Ireland) Order 1986.
#### Failure to make return for corporation tax.
##### 83
With respect to failures to deliver returns required by notices served under section 11 of the Management Act after the appointed day, for section 94 of that Act (failure to make return for corporation tax) there shall be substituted the following section—
> (94)
> (1) If a company has been required by a notice served under section 11 of this Act (or under that section as extended by section 12 of this Act) to deliver a return for any period (in this section referred to as “the return period”) and the company fails to make proper delivery of the return, then, subject to subsections (3) and (5) below, the company shall be liable to a penalty which,—
> (a) if the return is delivered before the expiry of the period of three months beginning on the day following the final day for the delivery of the return, shall be £100; and
> (b) in any other case, shall be £200.
> (2) In relation to a return required by such a notice as is referred to in subsection (1) above,—
> (a) any reference in this section (however expressed) to the delivery of the return is a reference to its delivery together with the accompanying accounts, statements and reports referred to in section 11(1) of this Act; and
> (b) any reference in this section to making proper delivery of the return is a reference to the delivery of the return on or before the day which (in accordance with section 11(4) of this Act) is the final day for the delivery of the return.
> (3) In a case where—
> (a) a company is required to deliver a return for a return period, and
> (b) the return period is a period for which, under the Companies Act 1985, the company is required to deliver accounts to the Registrar of Companies,
> the company shall not be liable to a penalty under subsection (1) above by reason of a failure to make proper delivery of the return if the return is delivered on or before the day which is the last day for the delivery to the Registrar of the accounts referred to in paragraph (b) above.
> (4) In the application of this section to a company registered in Northern Ireland, the reference in subsection (3) above to the Companies Act 1985 shall be construed as a reference to the Companies (Northern Ireland) Order 1986 and references to the Registrar of Companies shall be construed accordingly.
> (5) In any case where—
> (a) a company is within the charge to corporation tax for three consecutive accounting periods, each of which is a return period, and
> (b) at no time between the beginning of the first of those periods and the end of the last is the company outside the charge to corporation tax, and
> (c) the company fails to make proper delivery of the return for the third of those periods, and
> (d) the company was liable to a penalty under this section in respect of each of the first two of those periods,
> subsection (1) above shall have effect in relation to the failure referred to in paragraph (c) above as if for “£100” there were substituted “£500” and for “£200” there were substituted “£1,000”.
> (6) If a company which has been required as mentioned in subsection (1) above to deliver a return fails to deliver the return before the expiry of the period of eighteen months beginning on the day following the last day of the return period, then (without prejudice to any penalty under the preceding provisions of this section) the company shall be liable to a penalty which,—
> (a) if the return is delivered before the expiry of the period of two years beginning on the day following that last day, shall be 10 per cent. of the tax unpaid at the end of the eighteen months referred to above; and
> (b) in any other case, shall be 20 per cent. of the tax unpaid at the end of those eighteen months.
> (7) In subsection (6) above “the tax unpaid” at any time means the amount by which the corporation tax chargeable on the profits of the company for the return period which then remains unpaid exceeds any income tax borne by deduction from payments included in those profits.
> (8) In determining for the purposes of subsection (7) above how much of the corporation tax chargeable on the profits of a company for the return period remains unpaid at any time, no account shall be taken of the discharge of any liability for that tax which, pursuant to a claim under subsection (3) of section 85 of the Finance Act 1972, is attributable to an amount of surplus advance corporation tax, as defined in that subsection, unless it is a surplus for an accounting period ending not later than two years after the end of the return period.
#### Assessment of amounts due by way of penalty.
##### 84
- (1) Where it appears to the inspector or the Board that any person is liable to a penalty under any provision of section 94 of the Management Act, the amount appearing to be due may be assessed by the inspector or the Board as if it were tax; and, subject to the provisions of this section, the provisions of the Management Act and section 247 of the Taxes Act relating to the assessment and collection of tax shall have effect accordingly.
- (2) An amount assessed under this section by way of penalty shall be due at the end of the period of thirty days beginning with the date of the issue of the notice of assessment.
- (3) In any case where—
- (a) an assessment under this section relates to a penalty the amount of which falls to be determined under subsections (6) to (8) of section 94 of the Management Act, and
- (b) after the assessment has been made, it appears to the inspector or the Board that the amount which was taken into account in the making of the assessment as the tax unpaid (as defined in subsection (7) of that section) was incorrect,
all such adjustments shall be made, whether by way of amending the assessment, making a further assessment, repayment or otherwise as may be necessary to take account of the correct amount.
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) At the end of section 70 of the Management Act (evidential certificates) there shall be inserted the following subsection—
@@ -1838,17 +1571,7 @@
> (b) a certificate of a collector that payment of that amount has not been made to him or, to the best of his knowledge and belief, to any other collector, or to a person acting on his behalf or on behalf of another collector,
> shall be sufficient evidence that the amount mentioned in the certificates is unpaid and is due to the Crown; and any document purporting to be such a certificate as is mentioned in this subsection shall be deemed to be such a certificate unless the contrary is proved.
- (5) Where there is a failure to make proper delivery of a return, within the meaning of section 94 of the Management Act, an assessment of an amount due by way of penalty under any provision of that section may be made at any time within six years beginning on the day on which the failure began or, in the case of a penalty under subsection (6) of that section, at any later time within three years beginning at the time of the final determination of the amount which is the unpaid tax for the purposes of that subsection.
- (6) On an appeal against an assessment of an amount by way of penalty under section 94 of the Management Act, subsections (6) to (8) of section 50 of that Act shall not apply but the Commissioners—
- (a) may confirm the amount of the assessment or, if it appears to them that the amount assessed is greater or smaller than the penalty provided for under the said section 94, may reduce it or increase it to such an amount as is appropriate having regard to the provisions of that section; and
- (b) if it appears to them that no penalty has been incurred, may set the assessment aside.
- (7) Nothing in sections 34 to 40 (time limits) of the Management Act applies to an assessment made by virtue of this section and nothing in section 55 of that Act (recovery of tax not postponed) applies to an appeal against such an assessment.
- (8) Section 100 of the Management Act (procedure for recovery of penalties) shall not apply to a penalty under section 94 of that Act.
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (9) This section has effect with respect to penalties incurred after the appointed day.
@@ -1861,15 +1584,33 @@
With respect to accounting periods ending after the appointed day, after section 87 of the Management Act there shall be inserted the following section—
> (87A)
> (1) Corporation tax shall carry interest at the prescribed rate from the date when the tax becomes due and payable (in accordance with section 243(4) of the principal Act) until payment.
> (1) Corporation tax shall carry interest at the rate applicable under section 178 of the Finance Act 1989 from the date when the tax becomes due and payable (in accordance with section 10 of the principal Act) until payment.
> (2) Subsection (1) above applies even if the date when the tax becomes due and payable (as mentioned in that subsection) is a non-business day within the meaning of section 92 of the Bills of Exchange Act 1882.
> (3) In relation to corporation tax assessed by virtue of section 266(2), section 267(3C), section 277(1) or section 278(5) of the Taxes Act or section 87(4) of the Capital Gains Tax Act 1979 (which enable unpaid corporation tax assessed on a company to be assessed on other persons in certain circumstances), the reference in subsection (1) above to the date when the tax becomes due and payable is a reference to the date when it became due and payable by the company.
> (4) In any case where—
> (a) there is in any accounting period of a company (in this subsection referred to as “the later period”) an amount of surplus advance corporation tax, as defined in subsection (3) of section 85 of the Finance Act 1972, and
> (b) pursuant to a claim under the said subsection (3), the whole or any part of that amount is treated for the purposes of the said section 85 as discharging liability for an amount of corporation tax for an earlier accounting period (in this subsection referred to as “the earlier period”), and
> (3) In relation to corporation tax assessed by virtue of section 346(2) or 347(1) of the principal Act, section 267(3C) or 278(5) of the Income and Corporation Taxes Act 1970, section 96(8) of the Finance Act 1990 or section 87(4) of the Capital Gains Tax Act 1979 (which enable unpaid corporation tax assessed on a company to be assessed on other persons in certain circumstances), the reference in subsection (1) above to the date when the tax becomes due and payable is a reference to the date when it became due and payable by the company.
> (4) Subject to subsection (7) below in any case where—
> (a) there is in any accounting period of a company (in this subsection referred to as “*the later period*”) an amount of surplus advance corporation tax, as defined in subsection (3) of section 239 of the principal Act, and
> (b) pursuant to a claim under the said subsection (3), the whole or any part of that amount is treated for the purposes of the said section 239 as discharging liability for an amount of corporation tax for an earlier accounting period (in this subsection referred to as “*the earlier period*”), and
> (c) disregarding the effect of the said subsection (3), an amount of corporation tax for the earlier period would carry interest in accordance with this section,
> then, in determining the amount of interest payable under this section on corporation tax unpaid for the earlier period, no account shall be taken of any reduction in the amount of that tax which results from the said subsection (3) except so far as concerns interest for any time after the date on which any corporation tax for the later period became due and payable (as mentioned in subsection (1) above).
> (5) A sum assessed on a company by such an assessment as is referred to in subsection (2) of section 102 of the Finance Act 1972 (recovery of payment of tax credit or interest on such a payment) shall carry interest at the prescribed rate from the date when the payment of tax credit or interest was made until the sum assessed is paid.
> (5) A sum assessed on a company by such an assessment as is referred to in section 252(5) of the principal Act (recovery of payment of tax credit or interest on such a payment) shall carry interest at the rate applicable under section 178 of the Finance Act 1989 from the date when the payment of tax credit or interest was made until the sum assessed is paid.
- (6) In any case where—
- (a) on a claim under section 393A(1) of the principal Act, the whole or any part of a loss incurred in an accounting period (“*the later period*”) has been set off for the purposes of corporation tax against profits of a preceding accounting period (“*the earlier period*”);
- (b) the earlier period does not fall wholly within the period of twelve months immediately preceding the later period; and
- (c) if the claim had not been made, there would be an amount or, as the case may be, an additional amount of corporation tax for the earlier period which would carry interest in accordance with this section,
then, for the purposes of the determination at any time of whether any interest is payable under this section or of the amount of interest so payable, the amount mentioned in paragraph (c) above shall be taken to be an amount of unpaid corporation tax for the earlier period except so far as concerns interest for any time after the date on which any corporation tax for the later period became (or, as the case may be, would have become) due and payable as mentioned in subsection (1) above.
- (7) Where, in a case falling within subsection (6)(a) and (b) above—
- (a) there is in the earlier period, as a result of the claim under section 393A(1) of the principal Act, an amount of surplus advance corporation tax, as defined in subsection (3) of section 239 of that Act; and
- (b) pursuant to a claim under the said subsection (3), the whole or any part of that amount is to be treated for the purposes of the said section 239 as discharging liability for an amount of corporation tax for an accounting period before the earlier period,
the claim under the said subsection (3) shall be disregarded for the purposes of subsection (6) above but subsection (4) above shall have effect in relation to that claim as if the reference in the words after paragraph (c) to the later period within the meaning of subsection (4) above were a reference to the period which, in relation to the claim under the said section 393A(1), would be the later period for the purposes of subsection (6) above.
#### Supplementary provisions as to interest on overdue tax.
@@ -1905,7 +1646,7 @@
> (2A) In any case where—
> (a) relief from corporation tax is given to any person by repayment, and
> (b) that tax was paid for an accounting period ending after the day which is the appointed day for the purposes of section 90 of the Finance (No. 2) Act 1987,
> (b) that tax was paid for an accounting period ending after the day which is the appointed day for the purposes of section 10 of the principal Act,
> that person shall be entitled to require that the amount repaid shall be treated for the purposes of this section, so far as it will go, as if it were a discharge of the corporation tax charged on him for that period.
- (7) This section has effect with respect to accounting periods ending after the appointed day.
@@ -1914,187 +1655,39 @@
##### 87
- (1) In any case where—
- (a) a repayment falls to be made of corporation tax paid by a company for an accounting period which ends after the appointed day, or
- (b) a repayment of income tax falls to be made in respect of a payment received by a company in such an accounting period, or
- (c) a payment falls to be made to a company of the whole or part of the tax credit comprised in any franked investment income received by the company in such an accounting period,
then, from the material date until that repayment or payment is made, the repayment or payment shall carry interest at the rate which, under section 89 of the Management Act, is for the time being the prescribed rate for the purposes of this section.
- (2) In relation to corporation tax paid by a company for an accounting period, the material date for the purposes of this section is the date on which the corporation tax was paid or, if it is later, the date on which corporation tax for that accounting period became (or, as the case may be, would have become) due and payable in accordance with section 243(4) of the Taxes Act.
- (3) In relation to a repayment of income tax falling within subsection (1)(b) above or a payment of the whole or part of a tax credit falling within subsection (1)(c) above, the material date is the date on which corporation tax became (or, as the case may be, would have become) due and payable for the accounting period in which the payment referred to in subsection (1)(b) above or, as the case may be, the franked investment income referred to in subsection (1)(c) above was received by the company.
- (4) For the purposes of this section a repayment of tax made on a claim under subsection (5) of section 286 of the Taxes Act (loans to participators etc.) shall be treated as if it were a repayment of corporation tax for the accounting period in which the repayment of, or of the part in question of, the loan or advance mentioned in that subsection was made but, in relation to such a repayment of tax, the material date for the purposes of this section is—
- (a) the date on which the loan or advance (or part thereof) is repaid; or
- (b) if it is later, the date on which the tax which is to be repaid was in fact paid.
- (5) Interest paid under this section shall be paid without any deduction of income tax and shall not be brought into account in computing any profits or income.
- (6) Where a repayment of corporation tax is a repayment of tax paid by a company on different dates, the repayment shall as far as possible be treated for the purposes of this section as a repayment of tax paid on a later rather than an earlier date among those dates.
- (7) In any case where—
- (a) there is in any accounting period of a company (in this subsection referred to as “the later period”) an amount of surplus advance corporation tax, as defined in subsection (3) of section 85 of the Finance Act 1972, and
- (b) pursuant to a claim under the said subsection (3), the whole or any part of that amount is treated for the purposes of the said section 85 as discharging liability for an amount of corporation tax for an earlier accounting period (in this subsection referred to as “the earlier period”), and
- (c) a repayment falls to be made of corporation tax paid for the earlier period,
then, in determining the amount of interest (if any) payable under this section on the repayment of corporation tax for the earlier period, no account shall be taken of any increase in the amount of the repayment resulting from the said subsection (3) except so far as concerns interest for any time after the date on which any corporation tax for the later period became due and payable (as mentioned in subsection (2) above).
- (8) In consequence of the preceding provisions of this section, no repayment supplement, within the meaning of section 48 of the Finance (No. 2) Act 1975, shall be paid in respect of any repayment of tax or payment of tax credit where the relevant accounting period, within the meaning of that section, ends after the appointed day.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Recovery of overpayment of tax etc.
##### 88
- (1) In section 30 of the Management Act (recovery of overpayment of tax etc.) after subsection (2) there shall be inserted the following subsection—
> (2A) In any case where—
> (a) interest has been paid under section 87 of the Finance (No. 2) Act 1987 on a repayment of tax, and
> (b) the whole or any part of that repayment has been paid to any person but ought not to have been paid to him, and
> (c) interest ought not to have been paid on that repayment, either at all or to any extent,
> then the amount of the repayment assessed under subsection (1) above may include an amount equal to the interest that ought not to have been paid.
- (2) After subsection (3) of that section there shall be inserted the following subsection—
> (3A) If, in a case not falling within subsection (2A) above,—
> (a) interest has been paid under section 87 of the Finance (No. 2) Act 1987 on a repayment of tax, and
> (b) that interest ought not to have been paid, either at all or to any extent,
> then an amount equal to the interest that ought not to have been paid may be assessed and recovered as if it were unpaid corporation tax.
- (3) At the end of subsection (4) of that section there shall be added the words
> and an assessment to recover—
> (a) an amount of corporation tax repaid to a company in respect of an accounting period, or
> (b) an amount of income tax repaid to a company in respect of a payment received by the company in any accounting period, or
> (c) interest on any such repayment of tax,
> shall be treated as an assessment to corporation tax for the accounting period referred to in paragraph (a) or (b) above, as the case may be, and the sum assessed shall carry interest at the prescribed rate for the purposes of section 87A of this Act from the date when the payment being recovered was made until payment.
- (4) After subsection (4) of that section there shall be inserted the following subsection—
> (4A) Where an assessment is made under this section to recover—
> (a) corporation tax repaid to a company in respect of an accounting period, or
> (b) income tax repaid to a company in respect of payments received by the company in an accounting period,
> and more than one repayment of that tax has been made in respect of that period, any sum recovered in respect of income tax or corporation tax repaid shall as far as possible be treated as relating to a repayment of that tax made later rather than to a repayment made earlier.
- (5) In section 102 of the Finance Act 1972 (rectification of excessive set-off etc. of advance corporation tax or tax credit) after subsection (1) there shall be inserted the following subsections—
> (1A) In any case where—
> (a) interest has been paid under section 87 of the Finance (No. 2) Act 1987 on a payment of tax credit, and
> (b) interest ought not to have been paid on that payment, either at all or to any extent,
> an assessment under this section may be made for recovering any interest that ought not to have been paid.
> (1B) Where—
> (a) an assessment is made under this section to recover tax credit paid to a company in respect of franked investment income received by the company in an accounting period, and
> (b) more than one payment of tax credit has been made in respect of that period,
> any sum recovered shall as far as possible be treated as relating to a payment of tax credit made later rather than to a payment made earlier.
- (6) In subsection (2) of that section after the words “tax credit” there shall be inserted “or interest on such a payment”.
- (7) Subsections (1) to (4) above have effect with respect to the recovery of—
- (a) repayments of corporation tax paid for accounting periods ending after the appointed day,
- (b) repayments of income tax on payments received by a company in any such accounting period, and
- (c) interest on such repayments;
and subsections (5) and (6) above have effect with respect to the recovery of interest on payments of tax credit (within the meaning of Part V of the Finance Act 1972) claimed in respect of accounting periods ending after the appointed day.
#### Prescribed rate of interest.
##### 89
- (1) In section 89 of the Management Act (prescribed rate of interest) for subsection (1) there shall be substituted the following subsection—
> (1) For the purposes of any provision of this Part of this Act and of section 87 of the Finance (No. 2) Act 1987 “the prescribed rate” means such rate as may for the time being be prescribed for the purposes of the provision in question by order made by the Treasury.
- (2) In subsection (2) of that section—
- (a) for the words “The Treasury may, by order in a” there shall be substituted “The power to make an order under this section shall be exercisable by”; and
- (b) for the words from “from time to time” to “either” there shall be substituted “and any such order may be framed either so as to prescribe a single rate”.
- (3) In subsection (3) of that section for the words from the beginning to “(2) above” there shall be substituted “Any rate of interest prescribed by order under this section”.
### Miscellaneous
#### Corporation tax to be payable without assessment.
##### 90
- (1) With respect to accounting periods ending after the appointed day, corporation tax shall be payable without the making of an assessment and, with respect to such periods—
- (a) in subsection (3) of section 243 of the Taxes Act (which provides for assessments by reference to accounting periods) for the words from “assessments” to “a company” there shall be substituted “corporation tax shall be computed and chargeable (and any assessments shall accordingly be made)”; and
- (b) in subsection (4) of that section (which specifies the date when corporation tax assessed for an accounting period is to be paid) the word “assessed” and the words from “or if it is later” onwards shall be omitted and for the words “paid within” there shall be substituted “due and payable on the day following the expiry of”.
- (2) With respect to loans or advances made (or treated as made) in an accounting period ending after the appointed day, in subsection (1) of section 286 of the Taxes Act (loans to participators etc.) for the words “assessed on and recoverable” there shall be substituted “due”.
- (3) With respect to loans or advances made (or treated as made) as mentioned in subsection (2) above, for subsection (4) of the said section 286 there shall be substituted—
> (4) Tax due by virtue of this section shall be due and payable within fourteen days after the end of the accounting period in which the loan or advance was made
.
- (4) Notwithstanding that, by virtue of the preceding provisions of this section, any corporation tax (or any amount due as if it were corporation tax) is due without the making of an assessment, no proceedings for collecting that tax (or other amount) shall be instituted—
- (a) unless it has been assessed; and
- (b) until the expiry of the period of thirty days beginning on the date on which the notice of assessment is issued;
and the reference in this subsection to proceedings for collecting tax or any other amount includes a reference to proceedings by way of distraint or poinding for that tax or other amount.
- (5) If, with respect to any accounting period,—
- (a) a company has paid an amount of corporation tax without the making of an assessment; and
- (b) at any time before an assessment to corporation tax for the period becomes final, the company has grounds for believing that, by reason of a change in the circumstances of the case since the tax was paid, the amount paid exceeds the company’s probable liability for corporation tax,
the company may, by notice in writing given to the inspector on or after the date which, under section 87 above, is the material date in relation to that tax, make a claim for the repayment to the company of the amount of that excess; and a notice under this subsection shall state the amount which the company considers should be repaid and the grounds referred to in paragraph (b) above.
- (6) If, apart from this subsection, a claim would fall to be made under subsection (5) above at a time when the company concerned has appealed against such an assessment as is referred to in paragraph (b) of that subsection but that appeal has not been finally determined, that subsection shall have effect as if, for the words from “make a claim” to “excess”, there were substituted “apply to the Commissioners to whom the appeal stands referred for a determination of the amount which should be repaid to the company pending a determination of the company’s liability for the accounting period in question”; and such an application shall be determined in the same way as the appeal.
- (7) Where, on an appeal against an assessment to corporation tax, a company makes an application under subsection (3) or subsection (4) of section 55 of the Management Act (postponement of tax charged but not paid etc.) that application may be combined with an application under subsections (5) and (6) above (relating to tax which was paid prior to the assessment).
#### Close companies: loans to participators.
##### 91
- (1) In section 109 of the Management Act (close companies: loans to participators) subsection (2) shall be omitted.
- (2) In subsection (3) of that section for “88” there shall be substituted “87A” and for the words from “charged” onwards there shall be substituted “under the said section 286 became due and payable shall be that determined in accordance with subsection (4) of that section”.
- (2) In subsection (3) of that section for “88” there shall be substituted “ 87A ” and for the words from “charged” onwards there shall be substituted “ under the said section 419 became due and payable shall be that determined in accordance with subsection (3) of that section ”.
- (3) After subsection (3) of that section there shall be inserted the following subsection—
> (3A) If there is such a repayment of the whole or any part of a loan or advance as is referred to in subsection (5) of section 286 of the principal Act, interest under section 87A of this Act on so much of the tax under the said section 286 as is referable to the amount repaid shall not be payable in respect of any period after the date on which the repayment was made.
> (3A) If there is such a repayment of the whole or any part of a loan or advance as is referred to in subsection (4) of section 419 of the principal Act, interest under section 87A of this Act on so much of the tax under the said section 419 as is referable to the amount repaid shall not be payable in respect of any period after the date on which the repayment was made.
- (4) This section has effect with respect to loans or advances made (or treated as made) in any accounting period ending after the appointed day.
#### Amendments relating to PAYE.
##### 92
- (1) Section 204 of the Taxes Act (pay as you earn) shall be amended in accordance with this section.
- (2) In subsection (2) (regulations) after paragraph (c) there shall be inserted the following paragraph—
> (cc) for requiring the payment of interest on sums due to the Board—
> (i) which are not paid by the due date, and
> (ii) of which the amount is determined by the inspector (before or after the due date) in accordance with the regulations,
> and for determining the date (being not less than 14 days after the end of the year of assessment in respect of which the sums are due) from which such interest is to be calculated
.
- (3) After subsection (3) there shall be inserted the following subsection—
> (3A) Any reference in the preceding provisions of this section to a payment of, or on account of, any income assessable under Schedule E includes a reference to anything which, in accordance with regulations under subsection (2) above, is to be treated as a payment of, or on account of, any such income.
#### Sub-contractors in the construction industry.
@@ -2139,13 +1732,13 @@
##### 94
In section 118(2) of the Management Act (cases where persons are deemed not to have failed to do things which are required to be done within a limited time), after the word “deemed”, in the second place where it occurs, there shall be inserted “not to have failed to do it unless the excuse ceased and, after the excuse ceased, he shall be deemed”.
In section 118(2) of the Management Act (cases where persons are deemed not to have failed to do things which are required to be done within a limited time), after the word “deemed”, in the second place where it occurs, there shall be inserted “ not to have failed to do it unless the excuse ceased and, after the excuse ceased, he shall be deemed ”.
#### Interpretation of Chapter V and consequential and supplementary provisions.
##### 95
- (1) In this Chapter “the Management Act” means the Taxes Management Act 1970.
- (1) In this Chapter “*the Management Act*” means the Taxes Management Act 1970.
- (2) Subject to subsection (3) below, any reference in this Chapter to the appointed day is a reference to such day as the Treasury may by order made by statutory instrument appoint, and different days may be so appointed for different provisions of this Chapter.
@@ -2153,7 +1746,7 @@
- (4) The provisions of Schedule 6 to this Act shall have effect, being provisions consequential on and supplementary to the provisions of this Chapter.
## PART II — Inheritance Tax etc.
## Part II — Inheritance Tax etc.
#### Interests in possession.
@@ -2167,7 +1760,7 @@
- (b) in subsection (2)(b) the words from “otherwise” onwards shall be omitted; and
- (c) in subsection (6) after the words “this Act” there shall be inserted “other than section 52”.
- (c) in subsection (6) after the words “this Act” there shall be inserted “ other than section 52 ”.
- (3) At the end of section 3A there shall be added the following subsection—
@@ -2189,7 +1782,7 @@
- (3) Subsections (1) and (2) above apply in any case where the acceptance of the property in question occurs on or after 17th March 1987 and paragraph 19 of Schedule 4 to the Finance Act 1975 or, as the case may be, section 18 of the Finance Act 1896 shall have effect subject to any such terms as are referred to in subsection (1) or subsection (2) above.
- (4) In this section“estate duty” and“property” have the meaning assigned by section 272 of the Inheritance Tax Act 1984.
- (4) In this section “*estate duty*” and “*property*” have the meaning assigned by section 272 of the Inheritance Tax Act 1984.
#### Personal pension schemes.
@@ -2199,12 +1792,9 @@
- (2) At the end of section 12(2) (dispositions by employers that are not transfers of value) there shall be added—
> or
> (c) it is a contribution under approved personal pension arrangements within the meaning of Chapter II of Part I of the Finance (No. 2) Act 1987 entered into by an employee of the person making the disposition
.
- (3) In section 12(3), for the words “both paragraph (a) and (b)” there shall be substituted the words “more than one paragraph”, and for the word “either” there shall be substituted the words “any one”.
- (c) it is a contribution under approved personal pension arrangements within the meaning of Chapter II of Part I of the Finance (No. 2) Act 1987 entered into by an employee of the person making the disposition”.
- (3) In section 12(3), for the words “both paragraph (a) and (b)” there shall be substituted the words “ more than one paragraph ”, and for the word “either” there shall be substituted the words “ any one ”.
- (4) In section 151 (treatment of pension rights etc.) after subsection (1) there shall be inserted—
@@ -2217,7 +1807,7 @@
.
## PART III — Miscellaneous and Supplementary
## Part III — Miscellaneous and Supplementary
#### Stamp duty: options, etc.
@@ -2225,31 +1815,31 @@
- (1) In section 50 of the Finance Act 1987 (stamp duty exemption for options to acquire, and other interests in, exempt securities), in subsection (1), after the word “acquire” there shall be inserted the words “or to dispose of”.
- (2) In subsection (30 of that section, after the words “the Finance Act (Northern Ireland) 1967” (in both places) there shall be inserted the words “or section 79(2) of the Finance Act 1986”.
- (2) In subsection (3) of that section, after the words “the Finance Act (Northern Ireland) 1967 ” (in both places) there shall be inserted the words “or section 79(2) of the Finance Act 1986”.
#### Stamp duty Reserve tax.
##### 100
- (1) The Finance Act 1986 shall have effect in relation to agreements to transfer securities made on or after 8th May 1987 with the insertion of the following section after section 89—
- (1) The Finance Act 1986 shall have effect in relation to agreements to transfer securities made on or after 8th May 1987 with the insertion of the following section after section 89 —
> (89A)
> (1) Section 87 above shall not apply as regards an agreement to transfer securities other than units under a unit trust scheme to B or B’s nominee if—
> (a) the agreement is part of an arrangement, entered into by B in the ordinary course of B’s business as an issuing house, under which B (as principal) is to offer the securities for sale to the public,
> (b) the agreement is conditional upon the admission of the securities to the Official List of The Stock Exchange,
> (1) Section 87 above shall not apply as regartds an agreement to transfer securities other than units under a unit trust scheme to B or B's nominee if —
> (a) the agreement is part of an arrangement, entered into by B in the ordinary course of B's business as an issuing house, under which B (as principal) is to offer the securities for sale to the public,
> (b) the agreement is conditional upon the admission of the securities to the Offical List of The Stock Exchange,
> (c) the consideration under the agreement for each security is the same as the price at which B is to offer the security for sale, and
> (b) B sells the securities in accordance with the arrangement referred to in paragraph (a) above.
> (2) Section 87 above shall not apply as regards an agreement if the securities to which the agreement relates are newly subscribed securities other than units under a unit trust scheme and—
> (a) the agreement is made in pursuance of an offer to the public maded by A (as principal) under an arrangement entered into in the ordinary course of A’s business as an issuing house,
> (d) B sells the securities in accordance with the arrangement referred to in paragraph (a) above.
> (2) Section 87 above shall not apply as regards an agreement if the securities to which the agreement relates are newly subscribed securities other than units under a unit trust scheme and —
> (a) the agreement is made in pursuance of an offer to the public made by A (as principal) under an arrangement entered into in the ordinary course of A's business as an issuing house,
> (b) a right of allotment in respect of, or to subscribe for, the securities has been acquired by A under an agreement which is part of the arrangement,
> (c) both those agreements are conditional upon the admission of the securities to the Official List of The Stock Exchange, and
> (c) both those agreements are conditional upon the admission of the securities to the Offical List of The Stock Exchange, and
> (d) the consideration for each security is the same under both agreements;
> and for the purposes of this subsection, “newly subscribed securities” are securities which, in pursuance of the arrangement referred to in paragraph (a) above, are issued wholly for new consideration.
> (3) Section 87 above shallo not apply as regards an agreement if the securities to which the agreement relates are registered securities other than units under a unit trust scheme and—
> and for the purposes of this subsection, “*newly subscribed securities*” are securities which, in pursuance of the arrangement referred to in paragraph (a) above, are issued wholly for new consideration.
> (3) Section 87 above shall not apply as regards an agreement if the securities to which the agreement relates are registered securities other than units under a unit trusty scheme and —
> (a) the agreement is made in pursuance of an offer to the public made by A,
> (b) the agreement is conditional upon the admission of the securities to the Official List of The Stock Exchange, and
> (c) under the agreement A issues to B or his nominee a renouncable letter of acceptance, or similar instrument, in respect of the securities.
> (4) The Treasury may by regulations amend paragraph (b) of subsection (1)above, paragraph (c) of subsection (2) above, and paragraph (b) of subsection (3) above (as they have effect for the time being); and the power to make regulations under this section shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of the House of Commons.
> (b) the agreement is conditional upon the admission of the securities to the Offical List of The Stock Exchange, and
> (c) under the agreement A issues to B or his nominee a renounceable letter of acceptance, or similar instrument, in respect of the securities.
> (4) The Treasury may by regulations amend paragraph (b) of subsection (1) above, paragraph (c) of subsection (2) above, and paragraph (b) of subsection (3) above (as they have effect for the time being); and the power to make regulations under this section shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of the House of Commons.
- (2) Section 91 of the Finance Act 1986 (liability to tax) shall have effect, and shall be deemed always to have had effect, with the omission of subsection (2).
@@ -2268,15 +1858,15 @@
- (3) Section 63 of the Finance Act 1987 (blends of oil from two or more fields) shall have effect with the omission from subsection (1) of the words from “and in” onwards and with the addition, at the end of that subsection, of the following subsection—
> (1A) In this section—
> (a) “oil field” includes an area which is a foreign field for the purposes of section 12 of the Oil Taxation Act 1983;
> (b) “oil” includes any substance which would be oil if the enactments mentioned in section 1(1) of the principal Act extended to such an area as is referred to in paragraph (a) above;
> (c) “blended oil” means oil which has been mixed as mentioned in subsection (1) above; and
> (d) “the originating fields”, in relation to any blended oil, means the oil fields from which the blended oil is derived.
> (a) “*oil field*” includes an area which is a foreign field for the purposes of section 12 of the Oil Taxation Act 1983;
> (b) “*oil*” includes any substance which would be oil if the enactments mentioned in section 1(1) of the principal Act extended to such an area as is referred to in paragraph (a) above;
> (c) “*blended oil*” means oil which has been mixed as mentioned in subsection (1) above; and
> (d) “*the originating fields*”, in relation to any blended oil, means the oil fields from which the blended oil is derived.
- (4) In paragraph 5 of Schedule 2 to the Oil Taxation Act 1975 (returns by the responsible person for an oil field) after sub-paragraph (2A) there shall be inserted the following sub-paragraph—
> (2B) If in any chargeable period oil won from the oil field is mixed as mentioned in section 63 of the Finance Act 1987 so as to give rise to blended oil, within the meaning of that section, then, as respects that chargeable period, for paragraph (a) of sub-paragraph (2) above there shall be substituted the following paragraph—
> (a) state the total of the shares of the participators in the oil field of the oil won from the field during the period less so much of the oil won from the field as is not saved
> (’) state the total of the shares of the participators in the oil field of the oil won from the field during the period less so much of the oil won from the field as is not saved’.
- (5) Subsections (2) to (4) above have effect with respect to chargeable periods ending after 1st January 1987 and, subject to subsection (6) below, Schedule 8 to this Act has effect with respect to calendar months in chargeable periods beginning with March 1987.
@@ -2286,37 +1876,37 @@
##### 102
- (1) This section applies where a Minister of the Crown or any other person has power under any enactment (whenever passed) to require the payment of, or to determine by subordinate legislation the amount of, any fee or charge (however described) which is payable to the Minister or to any other person who is required to pay the fee or charge into the Consolidated Fund (whether the obligation is so expressed or is expressed as a requirement to make the payment into the Exchequer).
- (2) In the following provisions of this section, a power falling within subsection (1) above is referred to as a“power to fix a fee” and, in relation to such a power,—
- (a) “fee” includes charge;
- (b) “the appropriate authority” means, if the power is exercisable by a Minister of the Crown or any Commissioners, that Minister or those Commissioners and, in any other case, such Minister of the Crown as the Treasury may determine; and
- (c) “the recipient” means the Minister or other person to whom the fee is payable.
- (3) In relation to any power to fix a fee, the appropriate authority or any Minister of the Crown with the consent of the appropriate authority may, by order made by statutory instrument, specify functions, whether of the recipient or any other person and whether arising under any enactment, by virtue of any Community obligation or otherwise, the costs of which, in addition to any other matters already required to be taken into account, are to be taken into account in determining the amount of the fee.
- (4) In relation to any functions the costs of which fall to be taken into account on the exercise of any power to fix a fee (whether by virtue of subsection (3) above or otherwise), the appropriate authority or any Minister of the Crown with the consent of the appropriate authority may, by order made by statutory instrument, specify matters which, in addition to any matters already required to be taken into account, are to be taken into account in determining those costs, and, without prejudice to the generality of the power conferred by this subsection, those matters may include deficits incurred before as well as after the exercise of that power, a requirement to secure a return on an amount of capital and depreciation of assets.
- (1) This section applies where a Minister of the Crown of any other person has power under any enactment (whenever passed) to require the payment of, or to determine by subordinate legislation the amount of, any fee or charge (however described) which is payable to the Minister or to any other person who is required to pay the fee or charge into the Consolidated Fund (whether the obligation is so expressed or is expressed as a requirement to make the payment into the Exchequer).
- (2) In the following provisions of this section, a power falling within subsection (1) above is referred to as a “power to fix a fee” and, in relation to such a power,—
- (a) “*fee*” includes charge;
- (b) “*the appropriate authority*” means, if the power is exercisable by a Minister of the Crown or any Commissioners, that Minister or those Commissioners and, in any other case, such Minister of the Crown as the Treasury may determine ; and
- (c) “*the recipient*” means the Minister or other person to whom the fee is payable.
- (3) In relation to any power to fix a fee, the appropriate authority or any Minister of the Crown with the consent of the appropriate authority may, by order made by statutory instrument, specify functions, whether of the recipient or any other person and whether arising under any enactment, by virtue of the Community obligation or otherwise, the costs of which, in addition to any other matters already required to be taken into account, are to be taken into account in determing the amount of the fee.
- (4) In relation to any functions of the costs of which fall to be taken into account on the exercise of any power to fix a fee (whether by virtue of subsection (3) above or otherwise), the appropriate authority or any Minister of the Crown with the consent of the appropriate authority may, by order made by statutory instrument, specify matters which, in addition to any matters already required to be taken into account, are to be taken into account in determining the those costs, and, without prejudice to the generality of the power conferred by this subsection, those matters may include deficits incurred before as well as after the exercise of that power, a requirement to secure a return on an amount of capital and depreciation of assets.
- (5) No order shall be made under subsection (3) or subsection (4) above unless a draft of the order has been laid before, and approved by a resolution of, the House of Commons.
- (6) An order under subsection (3) or subsection (4) above has effect in relation to any exercise of the power to fix the fee concerned after the making of the order; but no earlier exercise of that power shall be regarded as having been invalid if, had the order been made before that exercise of the power, the exercise would have been validated by the order.
- (6) An order under subsection (3) or subsection (4) above has effect in relation to any exercise of the power to fix the fee concerned after the making of the order ; but no earlier exercise of that power shall be regarded as having been invalid if, had the order been made before that exercsie of power, the exercise would have been validated by the order.
- (7) In this section—
- (a) “Minister of the Crown” has the same meaning as in the Ministers of the Crown Act 1975;
- (b) “Commissioners” means the Commissioners of Customs and Excise or the Commissioners of Inland Revenue;
- (c) “enactment” does not innclude Northern Ireland legislation, as defined in section 24(5) of the Interpretation Act 1978; and
- (d) subject to paragraph (c) above,“subordinate legislation” has the same meaning as in the Interpretation Act 1978.
- (8) An Order in Council under paragraph 1(1)(b) of Schedule 1 to the Northern Ireland Act 1974 (legislation for Northern Ireland in the interim period) which states that it is made only for purposes corresponding to those of this section—
- (a) shall not be subject to sub-paragraphs (4) and (5) of paragraph 1 of that Schedule (affirmative resolution of both Houses of Parliament); but
- (a) “*Minister of the Crown*” has the same meaning as in the Ministers of the Crown Act 1975;
- (b) “*Commissioners*” means the Commissioners of Customs and Excise or the Commissioners of Inland Revenue;
- (c) “*enactment*” does not include Northern Ireland legislation, as defined in section 24(5) of the Interpretation Act 1978; and
- (d) subject to paragraph (c) above, “*subordinate legislation*” has the same meaning as in the Interpretation Act 1978.
- (8) An Order in Council under paragraph 1(1)(b) of Schedule 1 to the Northern Ireland Act 1974 (legislation for Northern Ireland in the interim period) which states that it only made for purposes corresponding to those of this section—
- (a) shall not be subject to sub-paragraphs (4) and (5) of paragraph 1 of that Schedule (affirmative resolution of both House of Parliament); but
- (b) shall be subject to annulment in pursuance of a resolution of either House.
@@ -2328,28 +1918,28 @@
- (2) Subsection (1) above does not apply to—
- (a) dutiable alcoholic liquor other than beer and cider; or
- (a) dutiable alcoholic liquor other than beer and cider ; or
- (b) tobacco products;
and the reference in subsection (1) above to a country outside the United Kingdom does not include a reference to the Isle of Man.
- (3) In section 1(1) of the Customs and Excise Management Act 1979, at the end of the definition of “transit or transhipment” there shall be added “or transhipment of those goods for use as stores”.
- (3) In section 1(1) of the Customs and Excise Management Act 1979, at the end of the definition of “transit of transhipment” there shall be added “ or transhipment of those goods for use as stores ”.
- (4) In subsection (1) of section 61 of that Act, after paragraph (a) there shall be added—
> (aa) as to the descriptions of vessel on which goods carried as stores may be used in port without payment of duty in accordance with section 103(1) of the Finance (N0. 2) Act 1987;
> (ab) as to the quantity of any goods which may be carried as stores for use in port as mentioned in paragraph (aa) above and as to the time within which such goods or any specified quantities of them may be so used; and
> (aa) as to the descriptions of vessel on which goods carried as stores may be used in port without payment of duty in accordance with section 103(1) of the Finance (No. 2) Act 1987;
> (ab) as to the quantity of any goods which may be carried as stores for use in port as mentioned in paragraph (aa) above and as to the time within which such goods or any specified quantities of them may be so used ; and
;
and in paragraph (b) of that subsection after the words “paragraph (a)” there shall be inserted “or paragraph (aa)”.
- (5) In subsection (5) of the said section 61 after the words “United Kingdom”, in the first place where they occur, there shall be inserted “or for use in port without payment of duty”.
and in paragraph (b) of that subsection after the words “paragraph (a)” there shall b inserted “ or paragraph (aa) ”.
- (5) In subsection (5) of the said section 61 after the words “United Kingdom”, in the first place where they occur, there shall be inserted “ or for use in port without payment of duty ”.
- (6) Subsections (1) and (2) above shall be construed as one with the Customs and Excise Management Act 1979.
- (7) Notwithstanding the generality of section 24 of the Value Added Tax Act 1983 (application of customs and excise enactments in relation to value added tax), subsections (1) and (2) above are excluded from the enactments to which that section applies.
- (7) Notwitstanding the generality of section 24 of the Value Added Tax Act 1983 (application of customs and excise enactments in relation to value added tax), subsections (1) and (2) above are excluded from the enactments to which that section applies.
#### Short title, interpretation, construction and repeals.
@@ -2357,13 +1947,13 @@
- (1) This Act may be cited as the Finance (No. 2) Act 1987.
- (2) In this Act “the Taxes Act” means the Income and Corporation Taxes Act 1970.
- (2) In this Act “*the Taxes Act*” means the Income and Corporation Taxes Act 1970.
- (3) Part I 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) The enactments specified in Schedule 9 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
## SCHEDULES 1—5
### Form.
@@ -3216,156 +2806,57 @@
## SCHEDULE 6
### Companies' capital gains.
### Companies’ capital gains
##### 1
- (1) With respect to chargeable gains accruing in accounting periods ending after the appointed day, section 266 of the Taxes Act (corporation tax attributable to chargeable gains: recovery from shareholder) shall be amended as follows.
- (2) In subsection (2) for the words “the date when it becomes payable by the company” there shall be substituted “the date determined under subsection (2A) below”.
- (3) After subsection (2) there shall be inserted the following subsection—
> (2A) The date referred to in subsection (2) above is whichever is the later of—
> (a) the date when the tax becomes due and payable by the company; and
> (b) the date when the assessment was made on the company.
- (4) In subsection (3) for the words from “a sum” onwards there shall be substituted “from the company a sum equal to that amount together with any interest paid by him under section 87A of the Taxes Management Act 1970 on that amount”.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 2
With respect to chargeable gains accruing in accounting periods ending after the appointed day, in subsection (3C) of section 267 of the Taxes Act (company reconstruction or amalgamation: transfer of assets)—
- (a) for the words “when it is payable” there shall be substituted “when it is due and payable or, if later, the date when the assessment is made on the company”;
- (b) for the words “the time when the tax became payable” there shall be substituted “the later of those dates”; and
- (c) for the words from “a sum” onwards there shall be substituted “from the chargeable company a sum equal to that amount together with any interest paid by him under section 87A of the Taxes Management Act 1970 on that amount”.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 3
- (1) With respect to chargeable gains accruing in accounting periods ending after the appointed day, section 277 of the Taxes Act (tax on company recoverable from other members of group) shall be amended as follows.
- (2) In subsection (1) for the words “the date when it becomes payable by the company” there shall be substituted “the date determined under subsection (1A) below” and for the words “the time when the tax became payable” there shall be substituted “the date determined under subsection (1A) below”.
- (3) After subsection (1) there shall be inserted the following subsection—
> (1A) The date referred to in subsection (1) above is whichever is the later of—
> (a) the date when the tax becomes due and payable by the company; and
> (b) the date when the assessment is made on the company.
- (4) After subsection (2) there shall inserted the following subsection—
> (2A) Any reference in subsection (2) above to an amount of tax includes a reference to any interest paid under section 87A of the Taxes Management Act 1970 on that amount.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 4
- (1) Section 278 of the Taxes Act (company ceasing to be member of a group) shall be amended as follows.
- (2) In subsection (3) at the beginning of the words following paragraph (b) there shall be inserted “then, subject to subsection (3A) below”, and after that subsection there shall be inserted the following subsection—
> (3A) Any chargeable gain or allowable loss which, apart from this subsection, would accrue to the chargeable company on the sale referred to in subsection (3) above shall be treated as accruing to the chargeable company as follows—
> (a) for the purposes for which the assumptions in section 262(2) of this Act apply, it shall be assumed to accrue in the notional or actual accounting period which ends when the company ceases to be a member of the group; and
> (b) subject to paragraph (a) above, it shall be treated as accruing immediately before the company ceases to be a member of the group.
- (3) In subsection (5)—
- (a) the words “of the”, in the first place where they occur, shall be omitted;
- (b) for the words “the date when it becomes payable” there shall be substituted “the date determined under subsection (5A) below”;
- (c) for the words “the time when the tax became payable” there shall be substituted “the said date”; and
- (d) for the words “a sum” onwards there shall be substituted “from the chargeable company a sum equal to that amount together with any interest paid by the company concerned under section 87A of the Taxes Management Act 1970 on that amount”.
- (4) After subsection (5) there shall be inserted the following subsection—
> (5A) The date referred to in subsection (5) above is whichever is the later of—
> (a) the date when the tax becomes due and payable by the company; and
> (b) the date when the assessment was made on the chargeable company.
- (5) In subsection (6) the words from the beginning to “group, and” shall be omitted.
- (6) This paragraph has effect where the accounting period in which the chargeable company ceases to be a member of the group ends after the appointed day.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 5
- (1) With respect to chargeable gains accruing in chargeable periods ending after the appointed day, section 87 of the Capital Gains Tax Act 1979 (restriction on application of sections 85 and 86 of that Act) shall be amended as follows.
- (2) In subsection (4)—
- (a) for the words “the date when it is payable” there shall be substituted “the date determined under subsection (4A) below”;
- (b) for the words “the time when the tax became payable” there shall be substituted “that date”; and
- (c) for the words from “a sum” onwards there shall be substituted “from the chargeable person a sum equal to that amount together with any interest paid by him under section 87A of the Taxes Management Act 1970 on that amount”.
- (3) After subsection (4) there shall be inserted the following subsection—
> (4A) The date referred to in subsection (4) above is whichever is the later of—
> (a) the date when the tax becomes due and payable by the chargeable person; and
> (b) the date when the assessment was made on the chargeable person.
### Relief for unremittable income.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Relief for unremittable income
##### 6
- (1) Section 418 of the Taxes Act (relief for unremittable income) shall be amended as follows.
- (2) At the beginning of subsection (2) there shall be inserted the words “Subject to subsection (2A) below”.
- (3) After subsection (2) there shall be inserted the following subsections—
> (2A) Where the tax chargeable is corporation tax, subsection (2) above shall have effect as if—
> (a) for the word “assessed”, in the second place where it occurs, there were substituted “assessable”;
> (b) for the words from “on the Board ceasing” to “take account” there were substituted “on the said conditions ceasing to be satisfied as respects any part of the income, it shall be treated as income arising on the date when those conditions cease to be satisfied with respect to it and account shall be taken”; and
> (c) for the words from “the date” onwards there were substituted “that date”.
> (2B) Where a company becomes chargeable to corporation tax in respect of income from any source by virtue of subsections (2) and (2A) above after it has ceased to possess that source of income, the income shall be chargeable under Case VI of Schedule D.
- (4) In subsection (5) for the words “subsection (2)” there shall be substituted “subsections (2) and (2A)”.
- (5) This paragraph has effect where the accounting period in which the conditions in subsection (2) of section 418 cease to be satisfied in relation to any income ends after the appointed day.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Charges on non-residents.
##### 7
With respect to tax in respect of accounting periods ending after the appointed day and interest on such tax, at the end of section 85 of the Management Act (application to corporation tax of provisions of Part VIII of that Act) there shall be added the following subsection—
> (2) Subsection (2) of section 83 above shall apply—
> (a) to corporation tax to which a person is chargeable in respect of a non-resident company and which has become due and payable without the making of an assessment; and
> (b) to interest to which he is chargeable on such tax under section 87A below,
> as it applies (by virtue of subsection (1) above) to corporation tax which has been assessed on him in respect of such a company.
### Lloyd’s underwriting agents.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Lloyd’s underwriting agents
##### 8
- (1) The Treasury may by regulations made by statutory instrument modify any of the provisions specified in sub-paragraph (2) below in their application to companies permitted by the Council of Lloyd’s to act as underwriting agents at Lloyd's.
- (2) The provisions referred to in subsection (1) above are—
- (a) section 11 of the Management Act (return of profits);
- (b) section 87A of that Act (interest on overdue corporation tax); and
- (c) section 243(4) of the Taxes Act (date for payment of corporation tax).
- (3) A statutory instrument made under this paragraph shall be subject to annulment in pursuance of a resolution of the House of Commons.
- (4) This paragraph has effect with respect to accounting periods ending after the appointed day.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
## SCHEDULE 7
##### 1
After section 54 of the Inheritance Tax Act 1984 (in this Schedule referred to as“the 1984 Act”) there shall be inserted the following sections—
After section 54 of the Inheritance Tax Act 1984 (in this Schedule referred to as “*the 1984 Act*”) there shall be inserted the following sections—
> (54A)
> (1) If the circumstances fall within subsection (2) below, this section applies to any chargeable transfer made—
> (a) under section 52 above, on the coming to an end of an interest in possession in settled property during the life of the person beneficially entitled to it, or
> (b) on the death of a person beneficially entitled to an interest in possession in settled property;
> and in the following provisions of this section the interest in possession mentioned in paragraph (a) or paragraph (b) above is referred to as“the relevant interest”.
> and in the following provisions of this section the interest in possession mentioned in paragraph (a) or paragraph (b) above is referred to as “*the relevant interest*”.
> (2) The circumstances referred to in subsection (1) above are—
> (a) that the whole or part of the value transferred by the transfer is attributable to property in which the relevant interest subsisted and which became settled property in which there subsisted an interest in possession (whether the relevant interest or any previous interest) on the making by the settlor of a potentially exempt transfer at any time on or after 17th March 1987 and within the period of seven years ending with the date of the chargeable transfer; and
> (b) that the settlor is alive at the time when the relevant interest comes to an end; and
@@ -3373,11 +2864,11 @@
> (d) that, within six months of the coming to an end of the relevant interest, any of the property in which that interest subsisted has neither—
> (i) become settled property in which a qualifying interest in possession subsists or to which section 71 below applies, nor
> (ii) become property to which an individual is beneficially entitled.
> (3) In the following provisions of this section“the special rate property”, in relation to a chargeable transfer to which this section applies, means the property in which the relevant interest subsisted or, in a case where—
> (3) In the following provisions of this section “*the special rate property*”, in relation to a chargeable transfer to which this section applies, means the property in which the relevant interest subsisted or, in a case where—
> (a) any part of that property does not fall within subsection (2)(a) above, or
> (b) any part of that property does not become settled property of the kind mentioned in subsection (2)(c) above,
> so much of that property as appears to the Board or, on appeal, to the Special Commissioners to be just and reasonable.
> (4) Where this section applies to a chargeable transfer (in this section referred to as“the relevant transfer”), the tax chargeable on the value transferred by the transfer shall be whichever is the greater of the tax that would have been chargeable apart from this section and the tax determined in accordance with subsection (5) below.
> (4) Where this section applies to a chargeable transfer (in this section referred to as “*the relevant transfer*”), the tax chargeable on the value transferred by the transfer shall be whichever is the greater of the tax that would have been chargeable apart from this section and the tax determined in accordance with subsection (5) below.
> (5) The tax determined in accordance with this subsection is the aggregate of—
> (a) the tax that would be chargeable on a chargeable transfer of the description specified in subsection (6) below, and
> (b) so much (if any) of the tax that would, apart from this section, have been chargeable on the value transferred by the relevant transfer as is attributable to the value of property other than the special rate property.
@@ -3393,12 +2884,12 @@
> (4) Subsection (5) below shall apply if—
> (a) during the period of seven years preceding the date on which a chargeable transfer to which section 54A above applies (“the current transfer”) is made, there has been another chargeable transfer to which that section applied, and
> (b) the person who is for the purposes of the current transfer the settlor mentioned in subsection (2)(a) of that section is the settlor for the purposes of the other transfer (whether or not the settlements are the same);
> and in subsections (5) and (6) below the other transfer is referred to as the“previous transfer”.
> and in subsections (5) and (6) below the other transfer is referred to as the “*previous transfer*”.
> (5) Where this subsection applies, the appropriate amount in relation to the previous transfer (or, if there has been more than one previous transfer, the aggregate of the appropriate amounts in relation to each) shall, for the purposes of calculating the tax chargeable on the current transfer, be taken to be the value transferred by a chargeable transfer made by the settlor immediately before the potentially exempt transfer was made.
> (6) In subsection (5) above“the appropriate amount”, in relation to a previous transfer, means so much of the value transferred by the previous transfer as was attributable to the value of property which was the special rate property in relation to that transfer.
> (6) In subsection (5) above “*the appropriate amount*”, in relation to a previous transfer, means so much of the value transferred by the previous transfer as was attributable to the value of property which was the special rate property in relation to that transfer.
> (7) In this section—
> - “the relevant interest” has the meaning given by subsection (1) of section 54A above; and
> - “the special rate property” has the meaning given by subsection (3) of that section.
> - “*the relevant interest*” has the meaning given by subsection (1) of section 54A above; and
> - “*the special rate property*” has the meaning given by subsection (3) of that section.
.
@@ -3461,7 +2952,7 @@
> (c) in any case where the nomination is of a proposed supply or proposed appropriation and the participator is either the field operator or the operator of a relevant system, if the participator is of the opinion that the failure referred to in sub-paragraph (2A) above was caused by action necessarily taken by him in the interests of safety or the prevention of pollution or in accordance with good oil field practice.
> (2C) In relation to such a nomination as is referred to in sub-paragraph (2B)(c) above,—
> (a) a participator is the field operator if, in relation to the field specified in the nomination, he is the person having the function of organising or supervising operations for searching or boring for or getting oil in pursuance of a licence; and
> (b) the expression “relevant system” is applicable only where the oil to which the nomination relates is blended oil and is a reference to any system by which blended oil (in relation to which the field specified in the nomination is one of the originating fields) is transported, treated or stored prior to its disposal or relevant appropriation; and
> (b) the expression “*relevant system*” is applicable only where the oil to which the nomination relates is blended oil and is a reference to any system by which blended oil (in relation to which the field specified in the nomination is one of the originating fields) is transported, treated or stored prior to its disposal or relevant appropriation; and
> (c) a participator in an oil field is an operator of a relevant system, as defined above, if he is the person charged, or principally charged, with the operation of the system;
> and expressions used in paragraph (b) above have the same meaning as in section 63 of this Act.
@@ -3513,29 +3004,25 @@
##### 6
In paragraph 12 (nominations of blended oil by a participator in two or more fields )—
- (a) for the words from the beginning to “this Act” there shall be substituted
> (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, supply or appropriation of the blended oil
; and
In paragraph 12 (nominations of blended oil by a participator in two or more fields)—
- (a) for the words from the beginning to “this Act” there shall be substituted “(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, supply or appropriation of the blended oil”; and
- (b) at the end there shall be added—
> (2) In sub-paragraph (1) above “blended oil” and “the originating fields” have the same meaning as in section 63 of this Act.
> (2) In sub-paragraph (1) above “*blended oil*” and “*the originating fields*” have the same meaning as in section 63 of this Act.
## SCHEDULE 9
## PART I — Income Tax and Corporation Tax: General
## PART II — Capital Gains
## PART III — Inheritance Tax
## PART IV — Stamp Duty Reserve Tax
## PART V — Oil Taxation
## Part I — Income Tax and Corporation Tax: General
## Part II — Capital Gains
## Part III — Inheritance Tax
## Part IV — Stamp Duty Reserve Tax
## Part V — Oil Taxation
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
@@ -3766,25 +3253,3 @@
[^c11888871]: [1983 c. 56](https://www.legislation.gov.uk/ukpga/1983/56).
[^c11888881]: [1975 c. 22](https://www.legislation.gov.uk/ukpga/1975/22).
#### Interest on tax overpaid.
#### Stamp duty reserve tax.
#### Oil taxation.
#### Government fees and charges.
#### Short title, interpretation, construction and repeals.
These repeals have effect in relation to transfers of value made, and other events occuring, on or after 17th March 1987.
#### Acceptance in lieu: capital transfer tax and estate duty.
#### Stamp duty reserve tax.
#### Government fees and charges.
#### Short title, interpretation, construction and repeals.
These repeals have effect in relation to transfers of value made, and other events occuring, on or after 17th March 1987.
1987-07-23
Finance (No. 2) Act 1987
original version
Text at this date